Copper steady on US growth hopes

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Independent Newspapers

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London - Copper steadied on Monday with investors taking the view that the U.S. economy can withstand the Federal Reserve's modest tapering of monetary stimulus, and looking also at tight near-term supplies.

On the downside, however, China's cash market squeeze showed little sign of easing on Monday, reinforcing the view the central bank has shifted to tighter monetary policy in a bid to curb risky lending.

The key seven-day bond repurchase rate initially opened lower but then spiked to 8.9 percent earlier.

Three-month copper on the London Metal Exchange rose 0.03 percent to $7,240.50 a tonne by 1057 GMT. Copper is still down almost 9 percent this year, reflecting expectations of growing supply as more mines come on stream.

Trading appetite is likely to be thin this week with the LME shut on Wednesday and Thursday for Christmas.

“Growth is strong enough for the Fed to taper and that is a positive sign for copper,” said Credit Suisse analyst Tobias Merath.

He added: “We have seen inventory declines at the LME, and we have seen local premiums are still quite strong - an indication that end user demand is actually not so bad,”

Indicating tighter supplies, latest daily LME data showed copper stocks fell 3,450 tonnes to 379,100 tonnes, their lowest level since late January. Also, LME cash copper is trading at a $10.50 premium to the three-month benchmark .

Copper has bounced back nearly 10 percent from the year's low of $6,602 in June amid strong imports from top copper consumer China, and as sustained declines in copper stockpiles pointed to tighter near-term supply.

Data out earlier showed China's imports of refined copper in November jumped 31.22 percent to 328,907 tonnes.

China accounts for about 40 percent of the world's copper demand and analysts say recent imports of the metal may have been used for financing rather than being consumed by end-users.

But Beijing's recent clampdown on copper financing may affect flows of the metal into China in the first half of 2014, investment bank Macquarie said in a note.

In other metals, aluminium fell 0.73 percent to $1,772 a tonne, while tin fell 0.22 percent to $22,900 a tonne after hitting a 10-day high of $23,145 on Friday.

In Indonesia, top tin exporter PT Timah has lifted a force majeure on shipments declared on Aug. 30 as conditions improved after the government introduced a rule forcing domestic producers to trade on a local exchange.

Zinc rose 1.25 percent to $2,065.75 a tonne, having earlier hit a fresh nine-month high of $2,070.50 a tonne.

Zinc stocks in LME-monitored warehouses dropped 4,200 tonnes, latest exchange data showed on Monday, bringing the total down to 890,625 tonnes, a fall of 175,225 tonnes or 16 percent over the past two months or so.

Lead rose to $2,222.75 a tonne, up 0.30 percent, having earlier hit its highest since late August at $2,226 a tonne.

PRICES

Three month LME copper CMCU3

Most active ShFE copper SCFcv1

Three month LME aluminium CMAL3

Most active ShFE aluminium SAFcv1

Three month LME zinc CMZN3

Most active ShFE zinc SZNcv1

Three month LME lead CMPB3

Most active ShFE lead SPBcv1

Three month LME nickel CMNI3

Three month LME tin CMSN3 - Reuters


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