METALS-Supply bottlenecks, U.S. data lift copper to 2-week high
* Speculators' net short positions rise to 32,000 lots from 10,000 Bottlenecks force Chinese copper importers to queue
* Markets eye U.S. nonfarm payrolls for Fed policy clues
LONDON, July 3 (Reuters) - Copper prices rose to its highest level in two weeks on Monday, spurred by bottlenecks in supply, increased purchases by Chinese importers in June and upbeat U.S. labour market data. Copper prices have pared some of June's steep losses as mine shutdowns have combined with limited delivery from London Metal Exchange-registered warehouses to choke immediate supply. Copper bucked the trend in other financial markets, with stocks in Europe sliding as deepening political turmoil in Portugal threatened to reignite the bloc's crisis. Three-month copper on the London Metal Exchange traded at $6,974 a tonne at 1400 GMT, up from a close $6,915 on Tuesday. Earlier in the day it reached $6,993.50, its highest level since June 19. It closed at $6,915 on Tuesday. Copper prices lost more than 7 percent in June and are down more than 12 percent in the year to date. "We had this long wave in which everyone was quite bearish about the outlook, panicking about China," Standard Chartered analyst Dan Smith said. "I was in Hong Kong last week and the week before and I was arguing quite strongly that we're going to see high prices by year end. We've seen a decent bounce in copper in the last few days, in line with that view." Smith sees copper at $7,000 plus before the end of the year, with Chinese base metals demand in reasonably good shape. Also, China's copper importers are being forced by bottlenecks in the LME warehousing system to queue for deliveries of metal they have already bought, resulting in spot copper import premiums rising by a third since mid-June.
However, growth in China's services sector expanded only modestly in June, in a sign that the economy is cooling. Helping gains was data showing U.S. private employers stepped up hiring in June and new applications for unemployment benefits fell for a second straight week last week, pointing to improving labour market conditions. U.S. non farm payrolls, due on Friday, is expected to be the main focus for markets this week, with economists polled by Reuters expecting payrolls to have risen by 165,000 in June.
"If the payroll number is stronger than the 165,000 expected, we could see a rather sharp selloff in a host of commodities, including metals, as the dollar will strengthen and boost expectations that the Fed will scale back its bond buying program, come September," said Ed Meir, analyst at INTL FCStone. "However, we think the jobs number will come in either in-line or slightly lower than forecast, implying that the Fed may not start tapering immediately." In copper short selling, Macquarie said that over the past three weeks speculators' positioning had moved from net short 10,000 lots on June 11, to net short 32,000 lots on June 25. "This has surpassed the previous record short position of 28,000 lots recorded during the depth of the global financial crisis in February 2009," Macquarie said in a research note.
Metal Prices at 1400 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 3.15 0.00 +0.10 365.25 -99.14 LME Alum 1817.25 -10.25 -0.56 2073.00 -12.34 LME Cu 6940.00 25.00 +0.36 7931.00 -12.50 LME Lead 2069.00 -10.50 -0.50 2330.00 -11.20 LME Nickel 13901.00 -139.00 -0.99 17060.00 -18.52 LME Tin 20025.00 -200.00 -0.99 23400.00 -14.42 LME Zinc 1877.50 -14.50 -0.77 2080.00 -9.74 SHFE Alu 14380.00 10.00 +0.07 15435.00 -6.84 SHFE Cu* 50750.00 550.00 +1.10 57690.00 -12.03 SHFE Zin 14630.00 55.00 +0.38 15625.00 -6.37 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07