Copper Rises to Two-Year High as Chinese Manufacturing Quickens

Copper rose to a two-year high in New York after a report showed that manufacturing accelerated in China, the world's biggest consumer of the metal.

Manufacturing expanded at the fastest pace in four months, a report from China's logistics federation and statistics bureau showed. Copper also climbed as the dollar slumped, making metals priced in the currency cheaper in terms of other monies and stoking demand for raw materials as an alternative investment.

"China is viewed as having engineered a gentle moderation in growth," said David Thurtell, an analyst at Citigroup Inc. in London. "Not too hot, not too cold."

Copper for delivery in December added 5.3 cents, or 1.5 percent, to $3.7045 a pound at 8:29 a.m. on the Comex in New York. Prices earlier today touched $3.72, the highest level since July 2008, and headed for a third straight weekly gain.

On the London Metal Exchange, copper for delivery in three months climbed 1.6 percent to $8,141 a metric ton ($3.51 a pound). Tin rose to within 1.6 percent of a record and nickel posted the longest winning streak since 2007.

China's government-backed purchasing managers' index rose to 53.8 from 51.7 in August, beating the median forecast of 52.5 in a Bloomberg News survey of 15 economists. A separate PMI released on Sept. 29 by HSBC Holdings Plc and Markit Economics climbed to a five-month high.

Weaker Dollar

The U.S. Dollar Index, a six-currency gauge of the greenback's strength, fell as much as 0.7 percent, on course for a third straight weekly retreat. The gauge slid 8.5 percent in the third quarter, contributing to the 23 percent advance by the LME Index of the six main metals traded on the exchange.

Inventories of copper monitored by the LME fell for a fifth day to 373,800 tons, the lowest level since Nov. 3. Stockpiles shrank for a 32nd week in a row this week. Aluminum inventories today dropped for a 12th straight session to 4.35 million tons, the lowest level since June 25, 2009.

Tin for three-month delivery on the LME added 3.1 percent to $25,000 a ton. Prices touched $25,100, the highest level since May 16, 2008, and $400 below the record achieved that month. The metal has jumped 47 percent this year, leading gains on the LME, after production was disrupted in Indonesia and the Democratic Republic of Congo.

Nickel climbed 2.1 percent to $23,900 a ton, the eighth consecutive gain and the longest rally since April 2007. Aluminum added 1 percent to $2,375.50 a ton after reaching $2,387, the highest price since April 21. Zinc advanced 1.5 percent to $2,228.50 a ton and lead rose 1.3 percent to $2,307.75 a ton. Source: Bloomberg

Copper hits fresh 2-year high on China PMI data

* LME aluminium, nickel hit 5-month highs; tin 2-yr peak

* Shanghai copper may retrace to 48,000 yuan in Q4 [TECH/C]

* Coming up: U.S. core PCE price index, Aug; 1230 GMT

SINGAPORE, Oct 1 - LME copper hit a fresh 

two-year high on Friday, on upbeat manufacturing data from top
consumer China where markets are closed are closed for the
start of a week-long public holiday.

Three-month copper on the London Metal Exchange CMCU3
rose to $8,106 a tonne, highest since July 31, 2008. It eased
to $8,102.5 by 0630 GMT.

China's manufacturing sector gained momentum last month,
the official purchasing managers index (PMI) number showed,
providing further evidence that the economy is pulling smoothly
out of a second-quarter swoon.

"In the past two months we saw a pickup in PMI, which
foreshadows a rise in demand from China," said Ben Westmore,
commodity economist at National Australia Bank, "That is
probably what copper prices are responding to."

China's financial markets are closed for a week from Oct. 1
to 7 for the National Day holiday.

"It's mainly the PMI, but since China is out, it doesn't
take much to swing the market either way," said a
Singapore-based trader.

"We are likely to see copper press a little higher during
China's absence, on expectation of weaker dollar in addition to
increasing lengths from funds."

On LME's electronic trading platform, just 845 lots have
been traded so far. Normally about 2,000 lots go through the
system during Asian business hours.

Adding to the bullish sentiment, Vedanta Resources' (VED.L)
Indian unit Sterlite Industries (STRL.BO) shut down its
Tuticorin copper smelter, the world's ninth-largest, on court
order on Wednesday, and said it is seeking time to appeal the
order.

Shanghai copper closed at 60,600 yuan a tonne on Thursday,
while LME copper stood at $8,028. The arbitrage window between
the two markets is firmly shut, with Shanghai at a discount of
2,238 yuan to LME on Thursday.

The market is eyeing the core PCE price index from the U.S.

later today, to assess the health of the world's largest
economy. 

Wall Street wrapped up its best quarter in a year on
Thursday with the S&P and Nasdaq logging in the biggest monthly
gains since April 2009, as data showed the economy isn't in
such bad shape.

Some warned that copper prices have gone out of sync with
fundamentals, as demand has yet to recover to the level before
the financial crisis and prices are already at pre-crisis
levels.

"The concern in the market is that the prices are getting a
little bit frothy, that it doesn't really coordinate with
fundamentals," said Westmore of NAB.

"It will be interesting to see some market players to pare
some of their positions. Most likely we'll see some moderation
before China comes back."

Shanghai copper SCFc3 is seen to retrace to 48,000 yuan a
tonne over the fourth quarter, as the consolidation that
started from January high of 64,180 yuan has not completed,
according to Reuters market analyst Wang Tao. 

LME aluminium CMAL3 vaulted to a more than five-month

high of $2,374. LME nickel CMNI3 also hit a five-month peak
of $23,780. Tin CMSN3 hit $24,620, its highest since May
2008. Source: Reuters

Base metals prices at 0630 GMT
 Metal         Last       Change   Pct Move  End 2009 YTD pct
chg
 LME Cu        8102.50     92.50     +1.15    7375.00     
9.86
 LME Alum      2372.00     21.00     +0.89    2230.00     
6.37
 LME Zinc      2237.00     42.00     +1.91    2560.00   
-12.62
 LME Nickel   23750.00    350.00     +1.50   18525.00    
28.21
 LME Lead      2310.50     31.50     +1.38    2432.00    
-5.00
 LME Tin      24620.00    370.00     +1.53   16950.00    
45.25

Copper Climbs to 26-Month High on Chinese Manufacturing, Dollar's Decline

* Nickel up 1,9% to US$ 23,845/ton

* Tin hit the highest level since May 2008 to US$ 25,200

Copper jumped to a 26-month high in New York after a report showed manufacturing accelerated in China, the world’s biggest metal consumer.

China’s purchasing manager’s index rose to 53.8 in September from 51.7 in August, signaling the fastest expansion in four months, data from the country’s logistics federation and statistics bureau showed. Copper also rose as the dollar fell to the lowest level since January against a basket of six major currencies, bolstering the investment appeal of the metal.

“We are bullish longer term on copper,” said Evan Smith, who helps manage $2 billion at U.S. Global Investors Inc. in San Antonio. “China will be the biggest contributor to higher prices. Prices also get a lot of support from the dollar.”

Copper futures for December delivery climbed 3.90 cents, or 1.1 percent, to close at $3.6905 a pound at 1:21 p.m. on the Comex in New York. Earlier, the price reached $3.722, the highest level since July 30, 2008. This week, the metal advanced 2 percent, the third straight gain.

Inventories monitored by the London Metal Exchange fell for the fifth straight day to the lowest level since Nov. 3. Stockpiles are down 26 percent this year, on course for the first annual decline since 2004. Refined-copper output will trail demand next year, the first deficit since 2007, the International Copper Study Group said.

“Copper is getting more difficult to find,” Smith said. “There are no significant sources of supply coming into the market.”

On the LME, copper for delivery in three months climbed $86, or 1.1 percent, to $8,100 a metric ton ($3.67 a pound). The price has gained 35 percent in the past 12 months.

Tin rose $650, or 2.7 percent, to $24,900 a ton in London. Earlier, the prices reached $25,200, the highest level since May 16, 2008.

Nickel climbed $445, or 1.9 percent, to $23,845 a ton. The metal was up for the eighth straight session, the longest rally since April 2007.

Aluminum, zinc and lead also rose. Source: Bloomberg