ET:Copper edges up, cheered by China, US housing data
SHANGHAI: Copper rose on Thursday after stronger housing data from the United States and China eased concerns about the impact on demand for industrial metals from a slowdown in the global economy.
Prices were also propped up by signs that China could announce further monetary easing measures as soon as this weekend after Premier Wen Jiabao said the government would step up efforts to boost the economy in the second half.
Three-month copper on the London Metal Exchange rose 1 percent to $7,712.50 per tonne by 0727 GMT, extending gains after ending the prior session 0.6 percent higher.
The most active November copper contract on the Shanghai Futures Exchange climbed 0.8 percent to 56,230 yuan ($8,800) per tonne, after falling 0.3 percent previously.
"Prices haven't moved much today as buying power is still not strong. But talk in the market that Beijing may be announcing more monetary easing over the weekend is keeping the shorts at bay for now," said Orient Futures Derivatives department director Andy Du.
Gains were capped, however, by the euro zone's financial woes, especially after German Chancellor Angela Merkel said a solution to the bloc's problems was not yet in sight. In the United States, data showed groundbreaking of new homes rose in June to its highest pace in over three years, easing some worries about an economy showing signs of cooling.
A day earlier, data showed China's home prices broke eight straight months of decline to rise in June. In physical markets, traders said their copper sales were much lower compared to a year ago.
"In the copper downstream markets, there is a slight pick-up in state grid construction and construction, but these are still too weak now to boost overall demand," said an analyst with a trading firm. Traders added that lead is one of the strongest base metals in the Chinese market now due to a surge in battery production this year.
"From the statistics we've gathered, China's battery sales this year up to the end of May rose by 12 percent - a big boost to lead sales. Despite this, prices have been pressured by macroeconomic uncertainties," said an analyst with an international trader. Chinese traders hope infrastructure investments in the next few months will prop up demand.
According to media reports, China's big four state banks doubled their pace of lending in the first half of July from a month ago in part due to a pickup in borrowing by government-led investment schemes.
