RTRS:Copper, zinc at 4-month highs on stimulus hopes
(Reuters) - Shanghai copper and zinc hit their highest levels in four months on Monday as hopes that the United States and China will roll out more stimulus measures offset a slight decline in China's August copper imports.
The Shanghai contracts were also catching up with gains in London on Friday, when base metals rallied on news of a $150-billion infrastructure building program by Beijing and on hopes of easing by the Federal Reserve after disappointing U.S. jobs numbers.
The most active December copper contract on the Shanghai Futures Exchange shot up 2.6 percent to a session high of 58,130 yuan ($9,200) per tonne, the highest since early May, before edging down to 58,050 by 0407 GMT.
This was despite a 2.9 percent fall in Chinese copper imports in August from July, which Great Wall Futures analyst Li Rong attributed to China's still-sluggish downstream order books and lower financing demand due to easing credit conditions.
Market players said base metals were mostly bolstered in the session by expectations of the Fed embarking on another round of bond purchases, also known as QEIII, next week. The chances of this have jumped after disappointing August U.S. employment numbers released on Friday, according to a Reuters poll of economists.
"We are mostly looking forward to the Federal Reserve meeting for announcement of QEIII, which we think will boost commodities more than infrastructure-building programs in China and more policy details from the euro zone," said a Shanghai-based trader with an international firm. "But if the Fed doesn't roll out a QEIII soon, base metals prices are expected to fall."
All eyes are also on Europe this week, where key events include a September 12 ruling by Germany's constitutional court on the new euro zone bailout fund.
Madrid intends to discuss conditions attached to the ECB's bond-buying plan with euro zone finance ministers this week� while global lenders will return to Athens to assess Greece's austerity reforms before granting a bailout crucial to keeping the country afloat. A European Union finance ministers meeting is set for September 14-15.
Three-month copper on the London Metal Exchange, which already hit a near-4 month high in the prior session, extended gains on Monday by 0.4 percent to $7,998 per tonne. It had earlier hit a session high of $8,026 - the first time it broke above $8,000 since May 14.
Shanghai zinc hit a session high of 15,460 yuan, the highest since early May.
Shanghai lead rose to a high of 15,910 yuan, the loftiest since March. Shanghai aluminum touched 15,785 yuan, the highest since mid-June.
Also helping to spur stimulus hopes was a media report on Sunday that China would provide subsidies worth $2.2 billion to buyers of energy-efficient computers and air-conditioners in the latest effort to encourage the use of environmentally friendly technology and to stimulate domestic demand, especially after recent weak economic data.
A longer term plan by Beijing to order its dominant electricity distributors to source up to 15 percent of their power from renewable energy including wind may also boost the construction of more energy facilities and boost metals demand.
But slow compliance with this order means it may be years before the country's struggling wind power developers benefit, industry executives say.
In industry news, trading in shares of Glencore International Plc (0805.HK) was suspended on Monday, pending the release of information relating to its proposed all-share merger of equals with Xstrata Plc (XTA.L).
Base metals prices at 0407 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7998.00 28.00 +0.35 5.24
SHFE CU FUT DEC2 58050 1400 +2.47 4.35
LME Alum 2025.00 2.00 +0.10 0.25
SHFE AL FUT DEC2 15735 90 +0.58 -0.66
HG COPPER DEC2 365.20 0.70 +0.19 6.29
LME Zinc 1966.75 -3.25 -0.16 6.60
SHFE ZN FUT DEC2 15355 295 +1.96 3.79
LME Nickel 16510.00 10.00 +0.06 -11.76
LME Lead 2107.00 12.00 +0.57 3.54
SHFE PB FUT 15845 345 +2.23 3.63
LME Tin 20225.00 250.00 +1.25 5.34
LME/Shanghai arb 1243
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
