June 11, 2012 / 12:27 PM / 7 years ago

METALS-Copper rallies on China import data, Spain aid

* Spain gets 100 bln-euro package for its banks
    * China's copper imports post surprise rise in May
    * Greek elections, euro zone contagion worries cap gains
    * Coming up: U.S. IBD Consumer Confidence for May on Tues.

    By Chris Kelly and Maytaal Angel	
    NEW YORK/LONDON, June 11 (Reuters) - Copper posted its biggest one-day gain
in nearly two months on Monday, buoyed by encouraging import data from
top-consumer China and optimism surrounding a bailout for Spain's troubles
    Copper rallied 1.7 percent on the day, defying negative reversals in the
euro and in U.S. equities, after a near 12-percent rise in Chinese May copper
imports helped red metal prices stay in positive territory while the initial
euphoria from the $125 billion Spanish bank bailout faded later in the day.	
    "The copper market is far more driven at the margin by demand out of China,"
said Howard Simons, strategist with Bianco Research Group in Chicago.	
    Three-month copper on the London Metal Exchange ended up $125 or 1.7
percent at $7,420 a tonne, its largest daily gain since April 20, when the price
surged 1.77 percent.	
    It touched a near six-month low of $7,233.25 on Friday.	
    In New York, the COMEX July contract firmed 5.80 cents to settle at
$3.3430 per lb.	
    COMEX copper volumes neared 84,500 lots in late New York trade, close to  
14 percent above the 30-day norm, according to preliminary Thomson Reuters data.	
    The initial burst of buying in financial markets faded on Monday as
investors eyed the next risks in the euro zone debt crisis and remained cautious
ahead of elections in Greece.	
    Greece's general election next Sunday could rapidly change market sentiment
if radical leftists hostile to the austerity terms of Athens' EU/IMF bailout
outpoll the mainstream conservative and centre-left parties that signed the
deal, or the vote ends in another deadlock.  	
    "At the moment there are fears still of a possible contagion in the euro
zone ahead of the Greek elections on the weekend, and it is unlikely that the
market will rally further," said Eugen Weinberg, an analyst at Commerzbank. 	
    "Given the uncertainties about the euro zone debt crisis, it is too early to
call the bottom yet. As long as these (uncertainties) are not removed, it is
very difficult to see prices rebounding for any significant amount of time."	
    The euro retreated from near a three-week high against the dollar hit
earlier in the day, while Spanish and Italian bond yields reversed earlier
    Keeping metals prices supported was data showing an unexpected 11.7 percent
climb in China's May copper imports, an indication that demand could be stronger
in the near term following the recent price slump.	
    The data was a mixed bag, however, because it also showed China's inflation,
industrial output and retail sales all flagged in May for a second straight
month, which helped explain China's surprise rate cut last week. 
    "The Chinese data over the weekend weren't as bad as some were fearing, but
it's a market across commodities where the rallies we are seeing are more
short-covering than improving fundamentals," said Tom Kendall, an analyst at
Credit Suisse. 	
    A physical trader in Shanghai said an improved LME-ShFE arbitrage in May
gave long-term contract buyers and those using copper for financing an opening
to import.  	
    "Copper import losses fell to just around $140 a tonne at some point in May.
The level was not ideal, but better than the $500-700 losses in the previous
months," the trader said.  	
    Data also showed production of refined copper in China fell 1.4 percent from
a month earlier to a three-month low in May, with some smelters taking the
chance to carry out maintenance as consumption remained sluggish.
    Though output is expected to pick up in June, China's increased copper
imports, its better-than-forecast exports and its easier monetary policy should
reduce worries about slow demand in the world's top copper consumer.
    Elsewhere, nickel ended up $375 at $17,325 a tonne. Nickel prices
fell below $16,000 last Wednesday, its cheapest level since December 2009. 	
    Looking forward, analysts said weak global demand for stainless steel will
keep pressuring nickel prices, but some shorter-term support could come from
dwindling Chinese port stock levels and recent supply disruptions of nickel pig
iron from Indonesia.   	
    "I am bearish on nickel over the longer term, but there can be a temporary
lift to prices as soon as there are signs that Chinese port stocks are falling.
However, we are likely to see the effects of this supply-side boost only in a
few weeks' time," Shanghai Metals Market analyst Amy Chen said.  	
 Metal Prices at 1806GMT
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
  COMEX Cu       333.10        4.60     +1.40     343.60     -3.06
  LME Alum      1972.00      -13.00     -0.65    2020.00     -2.38
  LME Cu        7419.00      124.00     +1.70    7600.00     -2.38
  LME Lead      1913.50       11.50     +0.60    2035.00     -5.97
  LME Nickel   17300.00      350.00     +2.06   18710.00     -7.54
  LME Tin      19500.00     -200.00     -1.02   19200.00      1.56
  LME Zinc      1889.50       21.50     +1.15    1845.00      2.41
  SHFE Alu     15930.00       55.00     +0.35   15845.00      0.54
  SHFE Cu*     54600.00     1270.00     +2.38   55360.00     -1.37
  SHFE Zin     14855.00      170.00     +1.16   14795.00      0.41
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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