Copper price up on Chinese import data

Reuters | Wed, 10 Mar 2010 14:06

[miningmx.com] -- Copper prices rose on Wednesday, as data showing stronger-than-expected Chinese imports of the metal quelled some concerns that demand might be softening in the world's top base metals consumer.

Copper for three-months delivery on the London Metal Exchange was at $7,532 a tonne at 1045 GMT from $7,510 at the close on Tuesday.

Imports of unwrought copper, a key ingredient for China's manufacturers and its fast-expanding power sector, outstripped forecasts by rising 10.3 percent to 322,282 tonnes, or 22.2 percent based on a daily average.

"The copper imports are indicative of pretty robust demand growth within China," said Daniel Smith, an analyst at Standard Chartered. "Chinese imports of base metals will remain much higher than historical levels. They're going to surprise on the upside through the year."

The data reassured investors who have fretted China's buying is waning this year, compared to 2009 when Chinese demand helped the metal used in power and construction soar 140 percent.

Imports of copper scrap slipped 17 percent from January, which analysts attributed to a lack of scrap availability.

STOCKS DROP

A trend of falling LME stocks remained a key support for copper, with stocks down 700 tonnes on Tuesday to 538,175 tonnes.

Capping gains, however, the dollar rose against a basket of major currencies, making dollar-priced metals costlier for holders of other currencies.

The euro fell against the dollar as investors continued to fret about debt problems in euro zone countries such as Portugal and Greece.

"Worries about sovereign debts in Europe have weighed on both the euro and investor sentiment, while concerns have also focused on China as Beijing has announced a series of monetary tightening measures," said Leon Westgate, an analyst at Standard Bank.

"However, after a period of risk aversion in late January and early February, risk appetite seems to be returning."

Aluminium traded at $2,253 from $2,258. LME stocks of the metal, used in transport and packaging, fell 5,150 tonnes to some 4.5 million tonnes, their lowest level since July.

Earlier this year stocks hit a record above 4.6 million tonnes. A large portion is tied up in finance deals, to release cash for producers and to earn banks higher returns than they would get in money markets.

Zinc was at $2,378.75 from $2,375 and battery material lead was at $2,278 from $2,240. Tin traded at $17,600 from $17,550 and nickel was at $22,275 from $22,250.

Commodity trader Glencore, which has a 35 percent stake in mining group Xstrata, warned of a bumpy recovery after posting a 43 percent fall in 2009 net profit on weak prices hit by the downturn.