METALS-Copper edges higher on investment flows, China hopes
* New Year investment funds trickle into commodity sector
* China copper exports seen flat to lower for Dec
* Alcoa moves 4 percentage points down aluminium smelting cost curve
(Recasts, adds quotes, details; previous MELBOURNE) LONDON, Jan 9 (Reuters) - Copper edged higher on Wednesday in the second day of modest gains after solid results from the biggest U.S. aluminium producer Alcoa and as investors directed fresh cash into the sector. Optimism about further recovery in the world's biggest metals consumer China ahead of trade data also helped three-month copper on the London Metal Exchange add 0.2 percent to $8,096.75 per tonne by 1128 GMT. The most-traded April copper contract on the Shanghai Futures Exchange closed barely changed at 58,340 yuan ($9,400) a tonne. LME copper, which gained 4.3 percent last year, jumped to the highest levels in more than two months last week after a U.S. deal on the fiscal cliff, establishing a base above the $8,000 a tonne level after touching lows near $7,500 in November. Analyst Stephen Briggs at BNP Paribas in London said an uptick in risk appetite supported prices and that New Year investor allocations would likely continue to bolster the sector. "Generally more long-only money comes in to commodities at the beginning of the year and my sense is that's going to be still trickling in over the next week or two, so I'm biased to the upside." This was balanced by some modest liquididations linked to the second day of commodity index reweighting, he added. Morgan Stanley said in a note that the Dow Jones/UBS commodity index was shifting its weight towards precious metals from base metals. The DJ/UBS aluminium weighting fell to 4.9 percent from 5.9 percent and zinc declined to 2.5 percent from 3.4 percent. The market was also capped by worries about budget talks in the United States and an election in Italy. "Concerns over growth coming out of Europe and also the U.S is keeping a lid on prices moving higher," said Jonathan Barratt, chief executive of Barratt's Bulletin, a Sydney-based commodity research firm. Investors would closely eye December trade data from China, the world's biggest consumer of most commodities, due to be released on Thursday. Growth in China's vast manufacturing sector picked up in December, but copper imports were expected to fall as year-end demand dwindled while local output stayed strong.
ALCOA BOOST World shares got a boost after aluminium giant Alcoa reported fourth-quarter profit in line with Wall Street expectations. Alcoa expressed cautious optimism that demand for aluminium will continue to grow in 2013, helped in part by global growth in the aerospace and construction markets. It also said production cuts and closures carried out this year have helped it move further down the smelting cost curve. The aluminium market has generated a cumulative surplus of nearly 9 million tonnes since 2008, according to Deutsche Bank estimates, as finance deals to store the metal and strong premiums have kept production churning out. "We expect the aluminium market to be in surplus by about 1.3 million tonnes in 2013, nevertheless we believe that the average price will be modestly higher year-on-year, a function of stronger physical demand conditions in the Western World," Deutsche said in a note. LME aluminium rose 0.6 percent to $2,080 per tonne, and zinc gained 0.5 percent to $2,030. Lead added 0.2 percent to $2,333 a tonne, tin climbed 0.8 percent to $24,330 and nickel rose 0.6 percent to $17,325.
PRICES Metal Prices at 1128 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
COMEX Cu 367.70 1.25 +0.34 365.25 0.67 LME Alum 2079.00 11.00 +0.53 2073.00 0.29 LME Cu 8094.00 14.00 +0.17 7931.00 2.06 LME Lead 2333.50 28.50 +1.24 2330.00 0.15 LME Nickel 17431.00 106.00 +0.61 17060.00 2.17 LME Tin 24310.00 160.00 +0.66 23400.00 3.89 LME Zinc 2030.75 9.75 +0.48 2080.00 -2.37 SHFE Alu 15245.00 5.00 +0.03 15435.00 -1.23 SHFE Cu* 58160.00 20.00 +0.03 57690.00 0.81 SHFE Zin 15325.00 5.00 +0.03 15625.00 -1.92 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07 ($1 = 6.2241 Chinese yuan)
(Additional reporting by Melanie Burton, editing by William Hardy)