July 13, 2016 / 4:26 AM / 4 years ago

METALS-London copper breaks above $5,000/T as risk appetite returns

* China imports 420,000 T of copper in June, down 2.3 pct on mo

* LME aluminium hits near 1-year high

* LME nickel, LME zinc hit new 9-, 13- month tops respectively (Adds comment, detail; updates prices)

By Melanie Burton

MELBOURNE, July 13 (Reuters) - London copper surged through the $5,000 a tonne mark on Wednesday to hit the highest since late April, as renewed appetite for risk triggered a flurry of short-covering.

Prospects of solid U.S. growth and accommodative economic policy in major markets whet investor risk appetite that had been damaged by uncertainty from Brexit.

A weaker dollar and looser fiscal policy raise the allure of hard assets such as commodities that tend to hold their value as that of paper money falls.

“There’s been a definite risk-on tone which has been driving markets,” said analyst Daniel Hynes of ANZ in Sydney.

“In base metals, the market is definitely taking a glass half full approach at the moment and it’s probably a bit premature, given concerns over China’s growth and the questions over rising inventories.”

London Metal Exchange copper jumped as high as $5,032 a tonne, its strongest since April 29, before trading at $4,941.50 by 0751 GMT, an increase of 1.5 percent that extended Tuesday’s 2.5 percent gain.

The rally comes despite a dim fundamental outlook for prices, with a burst of new mine supply already feeding into global exchange inventories. LME copper stocks are the highest since February, up by half since early June alone.

Shanghai Futures Exchange copper rallied more than 5 percent to the highest since March 7 before ending up 4.1 pct at 38,580 yuan ($5,767) a tonne. Suggesting short-holders have been covering their losing positions, open interest has dropped by 27 percent since peaking on June 1, although it climbed again on Wednesday.

“Market players keep saying more easing is expected ... funds have been buying and stopping out of shorts, and in particular stopping out some big bearish downside option plays,” said a trader in Singapore.

Elsewhere, ShFE nickel staged a sharp turn around after rising as much as 4.8 percent to end the day 0.8 percent higher. ShFE zinc rallied 1 percent on prospects that steel makers will rush to boost output ahead of a government mandated shutdown later this month.

LME nickel hit $10,670 a tonne, its highest since October, before profit-taking drove prices down 1.2 percent, while LME zinc marked a new 13-month top and LME aluminium hit its loftiest in nearly a year.

In news, China’s imports of copper fell 2.3 percent from month ago to 420,000 tonnes in June, data from the General Administration of Customs showed.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin ($1 = 6.6838 Chinese yuan renminbi) ($1 = 6.6903 Chinese yuan renminbi) (Reporting by Melanie Burton; Editing by Joseph Radford and Christian Schmollinger)

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