METALS-Copper climbs 2 pct on upbeat China manufacturing data
* HSBC Flash PMI for China hits 4-month high of 50.1
* Korea Zinc buys from LME zinc stocks in Malaysia
* Coming next: US jobless data; 1230 GMT
LONDON, Aug 22 (Reuters) - Copper rose almost 2 percent on Thursday, supported by surprisingly upbeat August manufacturing data from top metals consumer China, which suggested the world's second-biggest economy might be stabilizing and demand for commodities could pick up. Activity in China's vast manufacturing sector hit a four-month high as new orders rebounded, a preliminary private survey showed. The Flash HSBC Purchasing Managers' Index rose just above 50, marking a return to growth in manufacturing activity, albeit very slight.
"There was a very positive reaction to the Chinese manufacturing data today since we are back above 50 and that suggests the government's 7-7.5 percent growth target could still be achieved this year," said VTB Capital analyst Andrey Kryuchenkov. "There is also some technical buying taking place but little development on the spot physical market just yet so I expect prices will remain broadly in range in the short term." Benchmark copper on the London Metal Exchange was up almost 2 percent to $7,372.50 by 0905 GMT after hitting a session high of $7,389 earlier. The metal has rebounded 11 percent from a three-year trough in late June but is still down about 7 percent this year. Data showing Germany's private sector expanded in August at its fastest rate since January was also supportive and a further sign that Europe is on a recovery track, which bodes well for copper demand. In other upbeat news for copper demand, China is already building, or has approved, more than half of a $100 billion network of high-voltage power lines to connect remote energy-producing regions to the east coast, a top official at the state grid firm told Reuters. China accounts for 40 percent of refined copper demand and the power sector is its biggest consumer due to the metal's high conductivity.
FED TIMING Clouding the outlook for metals is uncertainty over the impact of the U.S. Federal Reserve's plans to start tapering its stimulus measures soon. Minutes from the latest monetary policy meeting showed a few Fed officials thought it would soon be time to slow the pace of their bond buying "somewhat".
Tapering expectations pulled emerging market currencies and shares down and boosted the dollar and U.S. debt yields on Thursday. "Some investors moved away from emerging markets and towards the U.S. dollar, the Chinese renminbi and China-focused commodities," T-Commodity consultant Gianclaudio Torlizzi said. Signs china's economy is stabilising after a slowdown make commodities a safer bet for some investors in the very short term than equities or bonds given uncertainty about Fed policy. Torlizzi sees copper rising as high as $7,800 in the next few days, also helped by technical buying, but expects it to fall again in September. "China's monetary policy is still restrictive, until this changes copper should be sold on any rally," he said. In news on other metals, Korea Zinc has bought zinc from LME stocks in Malaysia to meet contractual sales, amid a supply shortage in the region and a pick-up in Chinese demand, traders said. Traders said premiums for zinc have climbed about $20 in the last week, with estimates at $180-$205 FOT (free on truck.)
Metal Prices at 0900 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
LME Alum 1911.00 14.00 +0.74 2073.00 -7.81 LME Cu 7373.50 53.50 +0.73 7931.00 -7.03 LME Lead 2238.50 25.50 +1.15 2330.00 -3.93 LME Nickel 14541.00 116.00 +0.80 17060.00 -14.77 LME Tin 21865.00 65.00 +0.30 23400.00 -6.56 LME Zinc 1990.25 23.25 +1.18 2080.00 -4.31 SHFE Alu 14440.00 15.00 +0.10 15435.00 -6.45 SHFE Cu* 52850.00 350.00 +0.67 57690.00 -8.39 SHFE Zin 15135.00 75.00 +0.50 15625.00 -3.14 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07