January 3, 2017 / 2:22 AM / 3 years ago

METALS-Fundamentals drive copper up at start of year

* Copper builds after strong end to 2016

* Investors positive on China, U.S. demand (Updates prices)

By James Regan

SYDNEY, Jan 3 (Reuters) - London copper kicked off 2017 in positive territory after a strong finish to 2016, as worries of weakening demand receded with expectations that consumption will be strong in the United States and China.

Three-month copper on the London Metal Exchange was up 0.54 percent at $5,565 a tonne by 0700 GMT. The metal gained 18 percent in 2016.

The most-traded copper contract on the Shanghai Futures Exchange rose 0.73 percent to 45,760 yuan ($6,580) a tonne.

The rise in copper prices comes despite the latest Chinese forecasts pointing to slower economic and industrial output growth.

China’s economic growth could slow to 6.5 percent this year from about 6.7 percent in 2016, a government-run think tank said, adding industrial output could grow 5.9 percent this year versus about 6.1 percent in 2016.

Copper was aided by a U.S. dollar that was holding on to broad gains as the prospect of rising U.S. interest rates kept economic sentiment bullish for the world’s biggest economy.

Against a basket of currencies, the dollar was 0.4 percent firmer.

“Copper is demonstrating strong demand fundamentals going forward, both in the short and longer term,” said Jason Chang, chief executive of Australia-based private equity firm EMR Capital.

EMR on Friday bought the Golden Grove copper mine for $210 million, the third such acquisition in a year.

But the Chinese New Year holiday in the first quarter of 2017 will mean slowing manufacturing activity, which could cap the metal’s upside temporarily, according to traders.

In other London metals, aluminium rose by 0.03 percent, lead dropped 1 percent, and nickel rose 1.7 percent.

ShFE zinc was 0.84 percent higher. ShFE nickel was up 0.29 percent and ShFE lead was 0.83 percent lower.


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 = 6.9544 Chinese yuan) (Reporting by James Regan; Editing by Michael Perry and Biju Dwarakanath)

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