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METALS-Strong China data helps copper to 4-1/2-month peak

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  1. A worker checks on the production of copper rods at Truong Phu cable factory in Vietnam's northern Hai Duong province, outside Hanoi November 2, 2013.
    • LME/ShFE arb: http://tmsnrt.rs/2oQ5nm2
    • Premium for cash zinc sees metal go back on warrant
    • China's aluminium output at record high in June

    (Recasts, adds comment, changes dateline from Melbourne)

    Copper prices hit 4-1/2-month highs on Monday as a combination of above consensus economic data from top consumer China and a weak dollar helped reinforce expectations of strong demand.

    Benchmark copper CMCU3 on the London Metal Exchange was up one percent at $5,985 a tonne at 0909 GMT. Earlier the metal used widely in power and construction touched 5,992.50, its highest since March 2.

    "There's a bid across the complex on the Chinese data," said Macquarie analyst Vivienne Lloyd. "This is the second time this month it's pressing against $6,000, if it doesn't crack this time, copper could start heading lower again."

    CHINA DATA: China's economy grew 6.9 percent in the second quarter from a year earlier, faster than expected. Industrial production rose 7.6 percent in June from a year earlier, above the 6.5 percent expected and the fastest in three months.

    CHINA PROSPECTS: "The manufacturing sector is heavily dominated by the private sector, which accounted for over 70 percent of China’s economic output," HSBC analysts said in a note. "The recovery of the private sector is the most notable and positive development since last year, and bodes well for both growth and debt sustainability."

    DEMAND: China accounts for nearly half of global copper consumption estimated at around 23 million tonnes this year.

    DOLLAR: The U.S. currency hit a 10-month low against a basket of currencies, making dollar-denominated commodities cheaper for holders of other currencies and potentially boosting demand. [FRX/]

    TECHNICALS: Copper support around $5,870, a Fibonacci level. A sustained break of strong resistance at $6,000 could trigger further buying towards $6,030, the March high. "There isn't much volume, $6,000 could be difficult," a trader said.

    ZINC SPREAD: A small premium for cash zinc over the three-month CMZN0-3 has seen metal put back on warrant in LME registered warehouses. Metal available to the market is up at 37 percent from 25 percent last week.[MZNSTX-TOTAL]

    CHINA ALUMINIUM: Aluminium prices were capped by China production, which jumped 7.4 percent year-on-year to 2.93 million tonnes in June, exceeding December's record of 2.89 million tonnes. China accounts for more than 50 percent of global aluminium supplies estimated at around 60 million tonnes.

    CHINA CRACKDOWN: Expectations of lower aluminium supplies from top producer China over coming months, due to shutdowns of illegal capacity, are expected to buoy aluminium prices. Capacity closures to improve air quality are also expected to help.

    PRICES: Aluminium CMAL3 was up 0.6 percent at $1,938 a tonne, zinc CMZN3 gained 1.9 percent to $2,841, lead CMPB3 rose 0.6 percent to $2,330, tin CMSN3 climbed one percent to $20,000 and nickel CMNI3 added 0.3 percent to $9,610.

    Top base and precious metals analysis - GFMS     http://tmsnrt.rs/2lvmIzW 

    LME/ShFE arb http://tmsnrt.rs/2oQ5nm2


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