copper up ,up and away, page-42

...............


Shanghai copper up 2 percent, tracing LME rally
(Reuters)
10 June 2009
SHANGHAI - Shanghai copper rose 2 percent on Wednesday, tracing London’s rally in the previous session, as the dollar weakened and investors showed renewed confidence in prospects of improvement in the global economy.

The dollar was little changed against other major currencies, after having fallen broadly in the previous session, as investors sought clues on whether a rate hike by the Fed would be possible.

A slew of Chinese data due this week is expected to show the economy is on the path to recovery even if the pace may be slower than some had hoped, according to economists and analysts in Reuters polls.

“The global market has expectations of rising oil prices, improving economy and inflation, which have pushed up metals,” said a Shanghai-based trader, adding that London copper was likely to be trading at high levels around $5,250-$5,300 a tonne in the short term.

“But afterwards, copper prices are likely to experience a downward correction in the next few months. A rise will be reasonable when consumption improves in September and October.”

The benchmark third-month Shanghai copper futures contract rose 2.3 percent to 41,800 yuan a tonne by 0222 GMT. The most-active contract for September delivery rose 2 percent to 41,720 yuan.

The three-month copper contract on the London Metal Exchange edged up 0.5 percent to $5,195 a tonne, after hitting a near eight-month high of $5207.75 in the previous session.

The RSI, or Relative Strength Indices, for copper and aluminium in both London and Shanghai, are above 70, a sign that the markets are overbought.

“End-users have to buy some to replenish their stockpiles, but the overall consumption is still sluggish. The current rally is not supported by consumption, but speculation,” said Zeng Chao, an analyst with Everbright Futures Co.

“But optimism in the market is rising, boosted by moves in the U.S. dollar and oil prices.”

Falling copper inventories in LME warehouses supported the sentiment. Stocks fell 1,500 tonnes on Tuesday to 297,850 tonnes, their lowest since early December. Cancelled warrants, or material tagged for delivery, slipped to 31,300 tonnes, or 10.6 percent of total stocks.

Shanghai aluminium rose nearly 1 percent to 13,540 yuan a tonne, while LME aluminium eased $14 to $1,650 from gains in the previous session, during which it hit $1,675.75, its highest since early December.

Rising cancelled warrants for aluminium spurred expectations that consumption of the metal, used in transport and packaging, had improved.

“In China, the real estate market has improved and the automobile sector is also doing well, sending positive signals on aluminium consumption,” said Liu Xu, an analyst with China International Futures in Shenzhen.

China’s passenger car sales in May rose 46.83 percent on the year to a near record, helped by a policy boost.

“But once prices rise, the idled aluminium smelting capacity will reopen, creating pressure on prices. There isn’t much room for aluminium prices to grow, as a consequence,” Liu said.