January 3, 2012 / 11:34 AM / 9 years ago

METALS-Copper at 3-week high on upbeat manufacturing data

* China's PMI, U.S. manufacturing fuel risk appetite
    * Tin, lead, zinc, aluminium also hit three-week highs
    * Workers head back to Freeport's Grasberg mine in Indonesia

    By Maytaal Angel and Harpreet Bhal	
    LONDON, Jan 3 (Reuters) - Copper prices surged to a
three-week high on Tuesday, lifted by an expansion in
manufacturing activity in the United States and China which
boosted hopes that demand for industrial metals is likely to
remain healthy. 	
    Three-month copper on the London Metal Exchange
(LME) ended at $7,790 a tonne, its highest level in three weeks
and up more than 2 percent from the previous session's close of
$7,600 a tonne. 	
    Benchmark tin, lead aluminium and
zinc also hit their highest intraday levels in roughly
three weeks on the first day of trading for the year. 	
    The pace of growth in the U.S. manufacturing sector
accelerated in December, its best month since June, according to
the Institute of Supply Management (ISM). 	
    Earlier in the session, metals prices were supported by data
showing China's official purchasing managers' index (PMI) rose
to 50.3 in December from 49 in November, indicating a slight
expansion in business activity in the factory sector.
    "The year has started on a better footing than many in the
market had feared so it is not surprising to see commodities up
across the board on the back of supportive equity markets, a
weak dollar and lower risk aversion," said Eugen Weinberg, head
of commodity research at Commerzbank. 	
    The upbeat data lifted European shares and nudged the euro
higher against the dollar, helping cement gains for metals
prices. A weak dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies. 	
    But the longer-term market outlook for the rest of the year
remains shaky, with all eyes on policymakers' efforts to resolve
the euro zone debt crisis. 	
    "It will depend on whether the debt crisis calms down or
whether investors remains jittery, (which) would be negative for
metals," said Peter Fertig, consultant at Quantitative Commodity
    The metal, used in power and construction, posted its first
annual decline in three years in 2011 when it lost a fifth of
its value on fears related to the euro zone debt crisis and the
global economic slowdown.  	
    On the technical front, analysts reckon the metal's downward
trend was still intact and expected to see further weakness
ahead if copper prices fail to break above $8,000 a tonne. 	
    "The price action of the last few months has been defined by
a new downtrend and although this was breached in December the
outlook is still unclear," Bill McNamara, technical analyst at
Charles Stanley said in a note. 	
    "Rallies up to and through $8,000 have failed twice and we
would need to see a decisive break above $8,000 to suggest that
the bull case is back on."	
    Soldering metal tin ended at a three-week high of $19,995 a
tonne, from the previous session's close of $19,200, while
battery material lead also hit its highest level in three-weeks
to close at $2,100 from $2,034 a tonne. 	
    Zinc closed at $1,878 from $1,845, having earlier also hit a
three-week high at $1,900, while aluminium closed at $2,076 from
$2,020, earlier hitting a 3-1/2-week high of $2,078.25. 	
    Nickel closed at $18,900 from $18,650.	
    Workers headed back to Freeport McMoRan Copper & Gold Inc's
 mine in Indonesia on Tuesday, according to a mine worker
who spoke to Reuters, at the end of a three-month strike that
shook labour relations in southeast Asia's biggest economy.
    Rio Tinto Alcan will shut down about a third of the
production at its 438,000-tonne Alma aluminum smelter in the
Canadian province of Quebec after locking out hundreds of
unionized workers in a contract dispute. 	
 Metal Prices at 1706 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in 
  Metal            Last      Change  Pct Move   End 2010   Ytd Pct
  COMEX Cu       353.00        9.50     +2.77     444.70    -20.62
  LME Alum      2074.50       54.50     +2.70    2470.00    -16.01
  LME Cu        7777.50      177.50     +2.34    9600.00    -18.98
  LME Lead      2083.75       49.75     +2.45    2550.00    -18.28
  LME Nickel   18880.00      230.00     +1.23   24750.00    -23.72
  LME Tin      19850.00      650.00     +3.39   26900.00    -26.21
  LME Zinc      1883.25       38.25     +2.07    2454.00    -23.26
  SHFE Alu     15845.00      -10.00     -0.06   16840.00     -5.91
  SHFE Cu*     55360.00     1140.00     +2.10   71850.00    -22.95
  SHFE Zin     14795.00      220.00     +1.51   19475.00    -24.03
 ** 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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