Copper prices strong, nearing record highs, focussing on US data, rather than China's restrictions. China's reliance on domestic nickel supplies limits impact of floods.
Author: Nick TrevethanPosted: Monday , 17 Jan 2011
SINGAPORE (REUTERS) -
London copper prices rose $10 on Monday, flirting with record highs, while Shanghai copper edged higher, shrugging off China's latest policy tightening move to focus instead on positive U.S. data.
Three-month copper on the London Metals Exchange edged up $10 to $9,660 a tonne by 0345 GMT, after closing Friday up about 0.3 percent at $9,650 a tonne. The metal hit a record high of $9,754 on Jan. 4.
"Demand conditions are in place for strength in the next two weeks and we could see more Chinese stockbuilding ahead of the Lunar New Year," said Ben Westmore, commodities analyst at National Australia Bank.
"Analysts continue to revise upward their deficit forecasts for the next two years. Macro data from the United States and other economies has surprised on the upside."
U.S. industrial output rose by a stronger-than-expected 0.8 percent in December as unusually cold weather caused utility output to soar, a Federal Reserve report showed on Friday.
The increase was the largest since July and was above a median forecast for a 0.5 percent increase in a Reuters poll and followed a downward revision in November's output growth to 0.3 percent from an originally reported gain of 0.4 percent.
Shanghai's benchmark third-month copper futures contract gained 50 yuan to 71,200 yuan a tonne.
China's central bank on Friday said it was raising lenders' required reserves by 50 basis points from Jan. 20, in its seventh increase since early 2010. The move, following an interest rate rise in December, is Beijing's latest step to mop up excess cash to hold down inflation.
"There was talk of some form of policy move during Friday's session, which made for a cautious day," said a trader in Hong Kong. "But I think the stronger cue was from the U.S. data, which will help underpin sentiment (Monday)."
China's state commodities stockpile operator plans to spin off commercial activities from its strategic operations, which could allow it to focus on buying and selling purely for macroeconomic and strategic reasons.
Nickel rose $25 to $25,900 after a rally of 1.3 percent in the previous session.
"Nickel has been quite interesting. There has been a discussion about the effect of the Queensland floods on the market -- the complementary nature of nickel and coking coal --though I am not entirely sold," Westmore said.
Chinese nickel pig iron producers also said so far they were seeing little impact from the devastating Australian floods, as they tended to source fuel domestically.
Technically, nickel has moved above a triple top resistance near $24,900, chartist Daryl Guppy of Guppytraders.com said.
"The rally moved to the first breakout target near $25,800. A break above this level has a target near $26,800. Look for a re-test of support near $24,900 before a rally re-test of $25,800 and breakout continuation."
Base metals prices at 0345 GMT
Metal Last Change Pct Move End 2010 YTD pct chg
LME Cu 9660.00 10.00 +0.10 9600.00 0.63
SHFE Cu* 71200.00 50.00 +0.07 71850.00 -0.90
LME Alum 2482.00 10.00 +0.40 2470.00 0.49
SHFE Alum* 16785.00 -30.00 -0.18 16840.00 -0.33
COMEX Cu** 440.90 4.20 +0.96 443.95 -0.69
LME Zinc 2452.00 -5.00 -0.20 2454.00 -0.08
SHFE Zinc 19230.00 65.00 +0.34 19475.00 -1.26
LME Nickel 25900.00 25.00 +0.10 24750.00 4.65
LME Lead 2682.00 4.00 +0.15 2550.00 5.18
LME Tin 26950.00 100.00 +0.37 26900.00 0.19
LME/Shanghai arb^ 3305
Dollar/yuan 6.5921 \ 6.5927
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
(Reporting by Nick Trevethan;Editing by Clarence Fernandez)
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