As we head into the final price list for the 2014 financial year it’s been a positive week of news on the commodity markets with Chinese Purchasing Managers Index for June at his highest reading in 7 months and good economic data out of the USA. In the Chinese port of Qingdao, Government officials are still probing allegations that Chinese metals trading firms have duplicated warehouse certificates in order to use a cargo several times to raise financing. As previously noted this has impacted copper, iron ore and aluminium.
**** DJ LME Copper Closes at Three-week High after Robust Chinese Data ****
By Francesca Freeman
LONDON–Copper futures closed at a three-week high on the London Metal Exchange Monday after some upbeat Chinese manufacturing data boosted demand hopes.
The LME’s three-month copper contract was up 0.9% at $6,884 a metric ton at the close of open-outcry trading, its highest daily settlement since June 2.
The HSBC China preliminary manufacturing Purchasing Managers’ Index came in at a seven-month high of 50.8, up from 49.4 in May. It was the first time this year that it moved above the key 50 mark, a level which separates expansion from contraction compared with the previous month.
The data have “given the base metals complex a boost and underscored the effect of the government’s mini-stimulus measures to help stabilise China’s flagging economy,” said Leon Westgate, an analyst at Standard Bank.
Copper’s fundamentals do not warrant a sustained move higher, however, and any rallies above $7,000 a ton will likely attract selling interest, said BNP Paribas analyst Stephen Briggs.
The copper market is likely to be in oversupply by 450,000 metric tons this year, with production projected to rise at a sharper rate than demand, said Mr. Briggs. “China has to date eagerly gobbled up supply surpluses, but it is now showing signs of indigestion,” he said.