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Thu, 2 Jul 09
Rolled copper coil (Source: Chinalco)
China figures buoy copper price
Reuters | Wed, 01 Jul 2009 16:06
[miningmx.com] -- COPPER prices rose on Wednesday as stronger Chinese manufacturing data helped lift sentiment,but gains are expected to be capped by a seasonal lull in demand.
Benchmark copper on the London Metal Exchange traded at $5,051 a tonne in official rings, from a close of $4,970 on Tuesday.
CLSA's China Purchasing Managers' Index (PMI) rose in June to 51.8 from 51.2 in May, showing further expansion in the country's manufacturing sector. China is the world's largest consumer of industrial metals.
"The Chinese PMI has helped, everyone is looking to China to remain a positive factor but we are talking about a market slowing as we go into the summer period," said Alex Heath, head of base metals trading at RBC Capital Markets.
Copper, used in power and construction, fell on Tuesday as investors adjusted their positions ahead of the end of the quarter and markets fretted that prices had risen too far in the face of weak fundamentals.
The market is tracking the dollar and waiting for the June Institute for Supply Mangement's survey of manufacturing in the
United States, the world's largest economy.
The dollar pared losses against the euro after a report showed US private employers cut more jobs than expected in June.
A stronger dollar makes metals priced in the US currency more expensive for holders of foreign currency.
But buoying sentiment in copper is falling stocks of the metal in LME warehouses, which at around 266,000 tonnes compare with levels around 500,000 tonnes in early April.
LME copper has gained about 60% in the first half of this year, driven primarily by Chinese buying for stockpiles.
"Rising investment sentiment, (a) possible record increase in bank lending in China and speculation that Chinese copper demand will offset deterioration in the rest of the world supports copper prices," said investment bank Fairfax in a note.
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