MARKETS-METALS (UPDATE 7)
* Stronger yuan also raises metal output costs
* Power accounts for about 45 percent of aluminium costs
(Updates prices, adds comment)
By Pratima Desai and Rebekah Curtis
LONDON, June 21 (Reuters) - Copper prices soared on Monday as China's pledge to make its yuan currency more flexible raised hopes of stronger demand growth from the world's largest consumer of industrial metals.
Benchmark lead on the London Metal Exchange touched $1,825 a tonne, its highest since June 1, and tin saw $18,250, matching the peak of May 28.
Three-month copper hit a session high of $6,729.75 a tonne. The industrial metal, often used as a gauge of economic activity, traded at $6,656 a tonne at 1409 GMT from $6,435 a tonne at the close on Friday.
China's move to make its yuan currency more flexible should be mildly bullish for many commodities, boosting China's purchasing power and possibly increasing its imports of copper and metals.
"Everyone's treating it as good news. It does undeniably make their imports stronger," said Alex Heath, head of base metals at London's RBC Capital Markets.
Analysts said the mood was tempered by news that China's central bank had ruled out a one-off revaluation of the currency.
Expectations of a slowdown in demand as the Northern Hemisphere summer begins also tempered sentiment.
"We're still going into summer, the likelihood is business will slow and some of the heat will come out of the pricing," Heath said.
CONFIRMATION
Also helping boost sentiment was the weaker dollar, which makes commodities priced in the U.S. currency cheaper for holders of other currencies.
"We need to see confirmation ... by their activity in currency markets," Robin Bhar, an analyst at Credit Agricole, said.
"China is the highest cost producer for some metals such as nickel and zinc. The one that sticks out the most is aluminium."
Aluminium traded at $1,991 a tonne from $1,945 at the close on Friday. Earlier it touched a session high of $2,019.
China is the world's largest producer and consumer of aluminium, used in transport and packaging. Production costs have risen recently because of soaring electricity prices.
Power is estimated by analysts to account for about 45 percent of aluminium smelting costs in China.
Stainless ingredient nickel traded at $19,960 a tonne from $19,595 at the close on Friday and zinc was at $1,796.25 from $1,725 a tonne.
Battery material lead was at $1,821 a tonne from $1,745 and tin was at $18,020 from $17,450.
Slightly weighing on the prevalent optimistic mood was news that China's refined copper imports fell 9.7 percent in May from April to 279,690 tonnes, but traders and analysts said the fall had been expected. Metal Prices at 1414 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 299.80 11.40 +3.95 334.65 -10.41 LME Alum 1985.00 40.00 +2.06 2230.00 -10.99 LME Cu 6642.00 207.00 +3.22 7375.00 -9.94 LME Lead 1814.00 69.00 +3.95 2432.00 -25.41 LME Nickel 19910.00 315.00 +1.61 18525.00 7.48 LME Tin 17970.00 225.00 +1.27 16950.00 6.02 LME Zinc 1790.00 65.00 +3.77 2560.00 -30.08 SHFE Alu 15005.00 470.00 +3.23 17160.00 -12.56 SHFE Cu* 53700.00 2770.00 +5.44 59900.00 -10.35 SHFE Zin 14845.00 790.00 +5.62 21195.00 -29.96 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
