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METALS-Copper tentative as China data may lessen easing
March 1, 2012 / 3:51 AM / 6 years ago

METALS-Copper tentative as China data may lessen easing

 * China Feb PMI faster than expected as export orders rise
 * Data points to less scope for monetary easing -Macquarie
 * Coming Up: U.S. construction spending; 1500 GMT

 (Adds Rio Tinto, updates prices)	
 By Manolo Serapio Jr	
 SINGAPORE, March 1 (Reuters) - London copper edged
lower in a cautious session on Thursday as investors shrugged
off data that showed top copper consumer China's manufacturing
sector grew faster than forecast, waiting for greater motivation
to take the market higher.	
 Copper has risen more than 11 percent this year, but
analysts say Chinese demand has to recover strongly to justify a
further increase in prices. While China's latest manufacturing
data beat expectations, some think it could discourage more
monetary easing by Beijing, which could dent copper demand.	
 China's official purchasing managers' index rose to 51.0 in
February from 50.5 in January, as new export orders for big
firms bounced back. 	
 "This is also telling us that there's less possibility for
China to loosen monetary policy further", with the economy
getting back on its feet, said Bonnie Liu, a commodity analyst
at Macquarie in Shanghai.	
 With the arbitrage window staying shut, giving the Chinese
no incentive to import copper, and liquidity still tight, Liu
said China's imports of refined copper may drop to around
250,000 tonnes in February from 335,480 tonnes in January.	
 China cut banks' reserve requirement ratio for the first
time this year in February to spur economic growth, and
economists expect more such moves are in the pipeline.	
 A separate private-sector survey of China's factory activity
portrayed a different picture of smaller companies lagging
behind the rebound. 	
 Three-month copper on the London Metal Exchange 
eased 0.4 percent to $8,465 a tonne by 0707 GMT, adding to a 1
percent decline on Wednesday.	
 The most-traded May copper contract on the Shanghai Futures
Exchange fell 1.3 percent to close at 60,290 yuan
($9,600) a tonne.	
 Wednesday's scramble out of risk assets, including copper,
was fuelled by U.S. Federal Reserve chief Ben Bernanke's
comments that the U.S. economy needs to strengthen, to cut the
still high jobless rate further, and the absence of indications
of more Fed bond purchases. 	
 That countered the positive impact from the half a trillion
euros in additional liquidity the European Central Bank injected
into the financial system to help fight a nagging debt crisis.
 But a continued draw in LME copper stockpiles suggests "that
physical demand is higher than many market participants
believe", Credit Suisse said in a note.	
 "We expect the price path in the coming days to be volatile.
Nevertheless, price risks are to the upside," the bank said.	
 Copper stocks in warehouses monitored by the LME fell to a
fresh 2-1/2 year low of 296,425 tonnes on Wednesday, down 2,425
tonnes. The ratio of cancelled warrants, material tagged for
delivery, to total stocks stood at 31.69 percent, mostly in U.S.
 In contrast, stockpiles of copper at warehouses monitored by
the Shanghai Futures Exchange CU-STX-SGH remained near 10-year
highs at more than 216,000 tonnes, despite dropping slightly
last week for the first time since early December.	
 Global miner Rio Tinto  said it
expects the copper market to stay tight despite growth in
supply, with the company anticipating rising costs and supply
disruptions to continue, following strikes last year. 	
 Rio, which is looking to sell most of its Australia and New
Zealand aluminium business, remains bearish on the aluminium
market, with smelters facing a margin squeeze as costs rise and
aluminium prices remain weak. 	
  Base metals prices at 0707 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8465.00    -34.00     -0.40     11.38
  SHFE CU FUT MAY2    60290      -780     -1.28      8.91
  HG COPPER MAR2     384.60     -2.55     -0.63     11.93
  LME Alum          2313.00    -17.00     -0.73     14.50
  SHFE AL FUT MAY2    16195       -55     -0.34      2.21
  LME Zinc          2089.00    -23.00     -1.09     13.22
  SHFE ZN FUT MAY2    15890      -250     -1.55      7.40
  LME Nickel       19499.00    244.00     +1.27      4.22
  LME Lead          2171.75     11.75     +0.54      6.72
  SHFE PB FUT      16050.00   -265.00     -1.62      5.00
  LME Tin          23700.00     75.00     +0.32     23.44
  LME/Shanghai arb^    2096
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
 ($1=6.2936 Chinese yuan)	
 (Reporting by Manolo Serapio Jr.; Editing by Sugita Katyal)	

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