By Melanie Burton
MELBOURNE, Jan 11 (Reuters) - London copper inched down on
Friday from a one-week high hit in the previous session after
China's export demand improved in December, while a slightly
stronger dollar weighed.
Commodities markets, including metals, rallied early in the
year after U.S. lawmakers pushed back a potential fiscal cliff
of expiring spending rises and tax cuts that threatened to
derail its economy, before losing momentum.
However, markets got a fresh boost after China's export
growth rebounded surprisingly sharply to a seven-month high in
December, a strong finish to the year after seven straight
quarters of slowdown. But subdued global demand means the spike
may not herald an enduring recovery.
'The market was rethinking whether the temporary resolution
of the fiscal cliff was going to help or just kick the can down
the road. Having that extra shot (China trade data) in the arm
was very helpful,' said Barclays commodity analyst Sijin Cheng
'Base metals are still struggling against their own
fundamentals and for copper that is its stock overhang. Until
that is worked down, you are going to have this weight over
prices, especially considering new mine supply coming on line
-one month of data isn't going to change that,' she added.
Copper stocks in China's bonded warehouses hit a record high
of over one million tonnes in November.
Three-month copper on the London Metal Exchange had
inched down 0.2 percent to $8,097 a tonne by 0702 GMT, having
earlier come within a few dollars of the previous session's
one-week peak of $8,165 a tonne.
Copper prices hit 2-1/2-month highs of $8,256.50 on Jan. 3,
and have advanced more than 2 percent so far this year.
Asian shares rose on Friday amid an improving outlook for
global economies and reduced anxiety over the euro zone's debt
problems, while the yen slid on renewed expectations for
aggressive monetary easing in Japan.
The euro zone economy will recover later in 2013 and there
are already some signs of stabilisation, the European Central
Bank said on Thursday after it unanimously held interest rates
at a record low.
The euro extended its climb on Friday to a one-week high of
$1.3279, before giving up gains. A weaker dollar makes
commodities, mostly priced in the greenback, cheaper for holders
of other currencies.
The most-traded April copper contract on the Shanghai
Futures Exchange closed down 0.6 percent at 58,440 yuan
a tonne, after earlier reaching its highest since Oct. 19 at
58,980 a tonne, playing catch-up with overnight gains in LME
Traders expected Chinese purchases of metals to stay quiet
over the next month.
'I contacted some potential customers this week, all said
they were busy with the year-end paperwork. Nobody really wants
to talk about business. They all said wait till Chinese New Year
is over,' said a Hong Kong-based trader.
The potential for tightness in bauxite, a raw material for
aluminium, remains but the risks have lessened over the past six
months as top consumer China has developed new sources of
supply, Goldman Sachs said in a note.
Bauxite is the primary raw material used to produce alumina
and aluminium and Indonesia is one of the largest global bauxite
suppliers, contributing around 15 percent to global supply in
2011, it noted.
Changes to Indonesian export regulations last year crimped
supply from the world's top exporter of the ore.
'Chinese alumina producers are planning to add significant
new capacity in 2013 (as much as 6 million tonnes of alumina)
specifically designed to run on domestic bauxite, reducing
China's reliance on Indonesia,' it said.
'As a result we expect aluminium will remain in contango and
continue underperforming in 2013.'
Base metals prices at 0702 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8097.00 -13.00 -0.16 2.12
SHFE CU FUT APR3 58440 -340 -0.58 1.32
HG COPPER MAR3 368.70 -2.20 -0.59 0.94
LME Alum 2117.25 3.25 +0.15 2.23
SHFE AL FUT APR3 15325 -35 -0.23 -0.13
LME Zinc 2039.00 1.00 +0.05 -1.19
SHFE ZN FUT APR3 15455 -90 -0.58 -0.58
LME Nickel 17445.00 45.00 +0.26 1.69
LME Lead 2335.50 2.50 +0.11 -0.19
SHFE PB FUT 15190.00 -10.00 -0.07 -0.39
LME Tin 24700.00 45.00 +0.18 5.56
LME/Shanghai arb^ 627
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
($1 = 6.2244 Chinese yuan)
(Editing by Muralikumar Anantharaman and Joseph Radford)
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