SG:LME copper gains as global recovery outweighs China data
Reuters reported that London copper rose but stayed off 4 month highs struck in the previous session as growing confidence about a global economic recovery overcame a tepid expansion in China's factory sector in January.
Speculators took bullish bets on copper this week after signs that Europe's banking sector was turning a corner while consumer confidence and spending has grown there and in the United States.
An official report on China's factories showed a tepid expansion in January but this was not enough to sour sentiment towards metals. Chinese data should get stronger into the second quarter.
Ms Bonnie Liu analyst of Macquarie in Singapore said that Global indicators are improving, so it makes sense to a certain extent that speculators are taking another look at copper.
Mr Liu said that she expected copper's rally to fizzle out over the extended Lunar New Year holiday with the scale of Chinese demand this year not expected to become clear until March when China's factories have ramped back up.
Three month copper on the London Metal Exchange climbed by 0.73% to USD 8,225 per tonne by 0713 GMT reversing losses from the previous session when it retreated after hitting the highest in nearly 4 months.
Copper prices rose as high as USD 8,291.25 a tonne on Thursday the loftiest since October 5 before profit taking pulled prices down 0.74% on the day.
The most-traded May copper contract on the Shanghai Futures Exchange climbed 0.17% to close at CNY 59,660 per tonne. China's giant manufacturing sector extended its mild recovery in January with weak foreign demand still crimping growth, a pair of surveys showed, underscoring that the country's rebound from its worst downturn in 13 years remains modest.
Open interest and volumes for LME copper have hit 2013 peaks this week. Coupled with rising prices, this suggests investors have taken fresh bullish bets on copper. LME open interest rose 2,531 lots to around 252,000 lots on Wednesday.
RBC Capital said that if the Chinese come in and buy after the holidays or we get another stimulus boost, then we can easily see the complex taking out recent highs as macro players will scramble to get in and play from the long side. Until then, we sit on the fence.
Attention is shifting now to a US jobs report that will be closely watched for signals of health. Hiring by US employers is likely to have held steady in January, pointing to modest growth in the economy despite worries that budget battles in Washington could derail the recovery.
