September 28, 2012 / 11:14 AM / 8 years ago

METALS-Copper rises on Spain relief, ends quarter up 7 pct

* China on holiday next week, ShFE closed Oct 1-5
    * Shanghai bonded copper at 650,000 tonnes -traders
    * Coming up: U.S. Chicago PMI for September at 1345 GMT

    By Susan Thomas
    LONDON, Sept 28 (Reuters) - Copper rose on Friday, on track for a more than
7 percent rise this quarter, as the euro rose against the dollar and after
debt-laden Spain unveiled a budget that reassured investors the euro zone crisis
had inched closer to resolution.
    Spain's detailed timetable for economic reforms and spending cuts drove both
commodities and equities higher. 
    And following new monetary stimulus unveiled by the United States and Japan
this month, markets expect China to cut interest rates to spur growth, as
weakening demand in China has damaged global economies and weighed on investor
sentiment.
    "The combination of Chinese fiscal stimulus, Federal Reserve unlimited
quantitative easing and possible resolution in Europe is a very positive mix for
base metals," Guy Wolf, macro strategist at Marex Spectron, said.
    "We expect significant fund flow into commodities over the quarter end and a
positive Q4 performance."
    Three-month copper on the London Metal Exchange was $8,246 a tonne
in official rings, extending gains from the previous session when it closed at
$8,175. Prices hit their lowest in two weeks at $8,082 a tonne on Wednesday.
    While copper was on track to post a 7.3 percent rise this quarter, after
falling 9 percent in the previous one, it is still down 0.4 percent this week.
    The euro rose against the dollar, recovering from a two-week low, after
Spain's budget announcement. A weaker dollar versus the euro makes metal priced
in the unit cheaper for Europe investors.
    "On the one hand if you believe in the liquidity argument then copper prices
should go higher, but the problem is the fundamentals are still very poor,"
Standard Chartered analyst Dan Smith said.
    "For me it's all in the balance because the stuff I'm hearing from Europe
demand is really poor, some people saying its the worst demand they've seen for
20 years," Smith said.
    Signs of slowing global growth persisted in Asia, where South Korea's
industrial output contracted for the third consecutive month, while Japan's
industrial output fell more than expected in August.
    In China, the world's top consumer of metals, final September figures for
the private sector HSBC manufacturing report will be released on Saturday,
followed by a National Bureau of Statistics report on Monday.
    Bonded copper stocks in Shanghai's customs cleared zones are again on the
rise, several traders said, with inventory held by a large warehouse eclipsing
record peaks seen at the start of the year.
    Total copper stocks held in Shanghai were sitting around 650,000 tonnes,
according to several traders with operations in Shanghai, up from around 620,000
tonnes at the start of August.
    "Short-term copper is going to have another little test on the upside, but I
find it very difficult to get bullish on copper at this point and I would look
for that rally to fade fairly quickly," Smith said.
    China's markets will be shut from Oct 1 to 5, draining liquidity from the
top metals consumer.
    In other metals, three-month tin was $21,740 in rings from $21,195
at the close on Thursday, while zinc was $2,112.50 from a $2,083 close.
Lead was $2,301 from $2,270 and aluminium was $2,126 from
$2,108.
    Nickel was $18,580 from $18,345.
  
 Metal Prices at 1206 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       376.60        2.10     +0.56     344.75      9.24
  LME Alum      2122.25       14.25     +0.68    2020.00      5.06
  LME Cu        8240.75       65.75     +0.80    7600.00      8.43
  LME Lead      2294.50       24.50     +1.08    2034.00     12.81
  LME Nickel   18551.00      206.00     +1.12   18650.00     -0.53
  LME Tin      21663.00      468.00     +2.21   19200.00     12.83
  LME Zinc      2111.25       28.25     +1.36    1845.00     14.43
  SHFE Alu     15760.00       65.00     +0.41   15845.00     -0.54
  SHFE Cu*     59770.00      670.00     +1.13   55360.00      7.97
  SHFE Zin     15680.00      100.00     +0.64   14795.00      5.98
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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