METALS-Copper hits 6-week high on China data

Mon Dec 3, 2012 5:51pm GMT

* China manufacturing PMI up for 1st time in 13 months
    * Shanghai composite index falls to 4-year low
    * U.S. manufacturing sector contracts in November


    By Maytaal Angel and Silvia Antonioli
    LONDON, Dec 3 (Reuters) - Copper touched a six-week high on Monday on
promising manufacturing data from top metals consumer China, but doubts over the
soundness of the global economy put a lid on gains.
    Benchmark copper on the London Metal Exchange hit $8,045 a tonne,
the highest since Oct. 19, before closing at $8,005, from Friday's close at
$7,994.
    The pace of activity in China's manufacturing sector quickened for the first
time in 13 months in November, a survey of private factory managers found,
adding to evidence the economy is reviving after seven quarters of slowing
growth and boosting metals prices. 
    China consumes about 40 percent of the global copper supply.
    Data also showed that the contraction in Europe's embattled manufacturing
sector eased to an eight-month low in November, although a meaningful recovery
still looked a long way off. 
    Doubts on the world's economic growth remained, however, as Chinese shares
closed at their lowest level since the first quarter of 2009 and data showed the
U.S. manufacturing sector had unexpectedly contracted in November, falling to
its lowest in over three years.  
    "The U.S. manufacturing data feeds expectations that the Federal Reserve
will announce a fourth round of quantitative easing on Dec. 14, and the Chinese
manufacturing data suggests the rally could continue to $8,150 in the next few
days," T-Commodity consultant Gianclaudio Torlizzi said.
    "However, I am a bit worried about the Shanghai composite index, which
continues to lose ground. It has a high correlation with copper prices, so I
think the rally is still vulnerable."
    The Shanghai Composite Index shed 1 percent on Monday to reach its
lowest close since January 2009, and the slide may have more room to run as more
retail investors, the market's mainstay, throw in the towel and look elsewhere
to make money.  
        
    U.S. SLOWDOWN RISKS
    Metals were also held back by continued uncertainty over the so-called U.S.
fiscal cliff - $600 billion in government spending reductions and expiring tax
cuts set to kick in at the start of next year that threaten to tip the economy
back into recession.   
    "The fiscal cliff would be a constant worry as we approach the deadline,
(but) I think we will have further rallies into year-end based on China in
particular," said Societe Generale analyst Robin Bhar.
    Looking ahead, markets will focus on a November U.S. labour report due at
the end of the week, which is expected to show a fourth-quarter slowdown is at
hand even without the fiscal cliff. 
    Underpinning metals, the dollar fell to a six-week low versus the euro on
signs Germany may be open to a Greek debt writedown. A weak dollar makes
dollar-priced metals cheaper for European and other non-U.S. investors. 
    Greece unveiled better-than-expected terms on Monday for a planned buy-back
of its debt, a day after German Chancellor Angela Merkel said Greece's creditors
might look at writing down more of its debt. 
    Tin closed at $21,855 a tonne from $21,845, while zinc ended
at $2,040 versus $2,047.
    The latest daily LME data showed 35,925 tonnes of zinc was put on warrant,
or registered, in New Orleans, extending the multi-month backlog there and
making physical supply harder to come by even as headline stocks remain at
record levels.
    Battery material lead closed at $2,256 a tonne from $2,252;
aluminium finished at $2,120 a tonne from $2,094, while stainless-steel
ingredient nickel closed at $17,500 from $17,650.
    
 Metal Prices at 1750 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       364.55        0.50     +0.14     344.75      5.74
  LME Alum      2118.00       24.00     +1.15    2020.00      4.85
  LME Cu        8012.75       18.75     +0.23    7600.00      5.43
  LME Lead      2252.25        0.25     +0.01    2034.00     10.73
  LME Nickel   17516.00     -134.00     -0.76   18650.00     -6.08
  LME Tin      21875.00       30.00     +0.14   19200.00     13.93
  LME Zinc      2039.25       -7.75     -0.38    1845.00     10.53
  SHFE Alu     15460.00      -35.00     -0.23   15845.00     -2.43
  SHFE Cu*     57520.00      250.00     +0.44   55360.00      3.90
  SHFE Zin     15435.00      -20.00     -0.13   14795.00      4.33
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07