China imports boosting copper market - Credicorp

Tuesday, May 13, 2014

Rising Chinese copper imports are spurring prices for the red metal, Lima-based investment bank Credicorp Capital said.

Copper closed last week at US$6,770/t on the London Metals Exchange as China increased imports by 41% to 1.78Mt through the first four months, Credicorp analyst Alvaro Zevallos said.

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Aluminum closed at US$1,722/t, tin at US$23,269/t, zinc at US$2,032/t and nickel at US$19,682/t, the bank said.

"China's trade data was the main driver for the price of copper," Zevallos wrote in a report. "One of the main sources of higher Chinese demand has been purchases for their power grid."

Nickel prices are rising on the suspension of operations at Vale's (NYSE: VALE) Goro nickel plant in New Caledonia, Indonesian restrictions and the conflict between Ukraine and Russia, home to the world's largest producer Norilsk Nickel, the bank said.

Gold closed at US$1,288.79/oz, while silver closed at US$19.16/oz, platinum at US$1,429.7/oz and palladium at US$801.75/oz, according to Credicorp.

Gold prices are falling on lower demand in India, the world's second biggest buyer of the metal, while Exchange Traded Funds cut their gold holdings through May 1 by 1.3% from a month earlier, the bank said. ETF silver holdings have remained stable, Credicorp said.

Metals markets will be keeping a close eye this week on US economic data and a speech by Federal Reserve chair Janet Yellen on May 15, the bank said.

Peru, the world's third-largest copper and zinc producer and fifth ranked for gold, is on track to double annual copper production to 2.8Mt/y by 2017, according to the energy and mines ministry (MEM). Metals exports dropped to US$3.83bn in the first quarter of 2014 from US$5.85bn a year earlier due to slumping copper and gold prices, according to exporter group Adex.