* Chinese, U.S. manufacturing data underpins copper
* Indonesia plans 25 pct mining export tax
* China’s financial markets shut Monday to Wednesday
By Susan Thomas and Silvia Antonioli
LONDON, April 3 (Reuters) – Copper fell slightly on Tuesday as the dollar
rose, but held close to its highest in nearly two months after manufacturing
data in China and the United States suggested recovery in the world’s two
biggest economies.
Three-month copper on the London Metal Exchange was $8,614 a tonne
by 1526 GMT, down from $8,640 at the close on Monday. It hit a session high of
$8,702.75, not far off this year’s peak of $8,765 reached in early February.
Volumes were light in a holiday shortened week, with China’s financial
markets shut until Wednesday, and many markets closed on Friday and Monday for
the Easter long weekend.
Copper rose more than 2 percent on Monday, its biggest single-day gain since
February.
“For me the big question for the base metals market this week is how
significant are those Chinese PMI figures yesterday, and the fact that we have
had a whole slew of good manufacturing data suggest that there is almost
certainly a pick up that is good news,” said Natixis analyst Nic Brown.
The Institute for Supply Management said on Monday its index of U.S. factory
activity rose to 53.4 from 52.4, topping economists’ expectations. Factory
activity also strengthened in leading Asian exporters China, South Korea and
Taiwan.
Manufacturing strengthened in the United States and China in March while the
euro zone contracted for the eighth straight month, underlining the uneven pace
of global economic growth. China accounts for 40 percent of global copper
consumption.
Many thought the bullish sentiment would be short-lived, however, as
fundamentals do not support a further price increase.
“I think the price surge is only temporary and mainly dictated by funds
taking new positions at the beginning of the quarter,” said Gianclaudio
Torlizzi, analyst at metals consultancy T-Commodity.
“The data has been used a bit as a pretext to buy copper but it wasn’t
particularly strong and, as the fundamentals remain mixed, I would suggest to
short-sell copper on any surge.”
Reports from the euro zone, which is teetering on the brink of recession,
showed the downturn in the region’s smaller nations has spread to core countries
Germany and France, according to purchasing managers’ indexes (PMIs) for March.
“What dampens the optimism a bit is that inventories at the London Metals
Exchange have risen on Monday. However, we think the bigger picture currently
matters more. Prices could gain a bit further in the days ahead,” Credit Suisse
said in a research note.
INVENTORIES RETREAT
Copper stocks in LME-monitored warehouses have started rising again after a
steady fall since October, partly indicating slower demand. Data on Tuesday
showed they climbed 3,100 tonnes to 260,650 tonnes.
A stronger dollar against a basket of currencies knocked some of the support
from metals prices. A stronger dollar makes dollar-denominated commodities more
expensive for consumers using other currencies.
The market awaited direction from minutes from the U.S. Federal Open Market
Committee meeting of March 13 due later, and from Wednesday’s European Central
Bank policy meeting. U.S. durable goods orders are also expected at 1400 GMT.
In fundamental news, Indonesia, a major global producer of raw materials, is
planning to impose a 25 percent export tax on coal and base metals this year, an
industry ministry official said on Tuesday, with the charge rising to 50 percent
in 2013.
“This is one of many examples around the world where mining companies are
making swillions, and everybody else involved wants a slice of the pie —
whether it is unions wanting higher wages or government wanting a bigger take of
what is a national resource,” said BNP Paribas metals analyst Stephen Briggs.
“It is not irrational,” he added.
Indonesia had outlined its plans last year, and the announcement had little
impact on the price of tin, one of the country’s big exports.
Benchmark tin on the LME was $23,290 from $23,250 at Monday’s close.
Zinc was $1,999 from $2,008. Lead was $2,061.75, aluminium
was $2,121 from $2,130 and nickel was $18,55 from $18,225.
“The recent sell off in nickel was overdone and we think that fundamentals
justify a recovery to around $20,000,” Torlizzi said.
Metal Prices at 1557 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct
move
COMEX Cu 391.85 -0.25 -0.06 334.65 17.09
LME Alum 2123.00 -7.00 -0.33 2230.00 -4.80
LME Cu 8615.00 -25.00 -0.29 7375.00 16.81
LME Lead 2069.00 9.00 +0.44 2432.00 -14.93
LME Nickel 18450.00 225.00 +1.23 18525.00 -0.40
LME Tin 23000.00 -250.00 -1.08 16950.00 35.69
LME Zinc 2022.00 14.00 +0.70 2560.00 -21.02
SHFE Alu 16165.00 -5.00 -0.03 17160.00 -5.80
SHFE Cu* 60010.00 270.00 +0.45 59900.00 0.18
SHFE Zin 15445.00 105.00 +0.68 21195.00 -27.13
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
