RTRS:METALS-Copper gains as China credit worries subside
* Freeport ramps up production at Indonesian mine
* Metals to remain under pressure as supply rises
* Coming next: U.S. jobless data; 1330 GMT
By Silvia Antonioli and Naveen Thukral
LONDON/SINGAPORE, June 26 (Reuters) - Copper gained some ground on Thursday
as China's credit crunch eased and on expectations that the U.S. and EU central
banks will not rush to reduce their stimulus programmes, though oversupply
worries kept gains in check.
Benchmark copper on the London Metal Exchange rose 0.5 percent to
$6,771.75 a tonne by 0852 GMT. The market slid to a three-year-low of $6,602 a
tonne on Tuesday.
The metal, used in power and construction, has lost almost 15 percent this
year.
In top metals consumer China, stocks clawed back some of their recent heavy
losses and cash markets steadied, but gains were capped by concerns that last
week's severe cash crunch was ushering in a period of tougher funding conditions
and slower economic growth.
Demand from China accounts for about 40 percent of global copper
consumption.
"For industrial metals, China is in the driving seat and the story of the
credit crunch is a bit of a problem. Today the situation has improved a bit and
commodities as a whole are slightly higher. There is a bit more optimism,"
Credit Suisse analyst Tobias Merath said.
"But we have doubts this is the start of any major rebound; we don't see the
fundamentals for that, with liquidity problems in China, forward looking
indicators not looking too well and a lot more supply coming in the metals
markets."
Copper was also supported by a downward revision on Wednesday of U.S.
economic growth estimates for the first quarter, easing worries that the Federal
Reserve might soon curb the massive monetary stimulus that has boosted commodity
prices.
European Central Bank (ECB) president Mario Draghi reiterated on Wednesday
that an ECB exit from its loose monetary policy remains distant, offering
additional support for the markets.
LONG-TERM VIEW
In the longer term, copper is expected to remain under pressure from slowing
growth in China and expectations of a bigger global surplus.
"There could be some upward correction on a short-term (basis), but we
remain bearish on copper," said Joyce Liu, an investment analyst at Phillip
Futures in Singapore.
"The market was supported by talk of output disruptions, but now producers
are ramping up supplies at a time when there is excess supply in the market."
Freeport McMoRan Copper and Gold Inc is ramping up production at its
Indonesian unit, a company spokeswoman said, six weeks after a deadly tunnel
collapse at the world's No. 2 copper mine halted operations.
In other metals, three-month aluminium was trading at $1,774 a
tonne, up 0.2 percent from Wednesday's close.
China has increased orders for spot shipments of aluminium in the past week
as prices in the international market have fallen close to four-year lows,
dipping below the price of locally produced metal.
Metal Prices at 0853 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
move
COMEX Cu 3.05 0.01 +0.39 365.25 -99.16
LME Alum 1774.25 3.25 +0.18 2073.00 -14.41
LME Cu 6770.50 35.50 +0.53 7931.00 -14.63
LME Lead 2042.00 11.00 +0.54 2330.00 -12.36
LME Nickel 13760.00 155.00 +1.14 17060.00 -19.34
LME Tin 19877.00 177.00 +0.90 23400.00 -15.06
LME Zinc 1846.75 8.75 +0.48 2080.00 -11.21
SHFE Alu 14285.00 15.00 +0.11 15435.00 -7.45
SHFE Cu* 49010.00 270.00 +0.55 57690.00 -15.05
SHFE Zin 14410.00 50.00 +0.35 15625.00 -7.78
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
