Shanghai copper jumps 2 percent on China stimulus hopes

MELBOURNE, Feb 2:  Shanghai copper jumped more than two percent on Monday, after an official report showed factory growth in China shrank for the first time in more than two years last month, fuelling hopes for increased stimulus from the world’s second biggest economy.
A private business survey mirrored the result, showing the factory sector contracted a second straight month in January, as 2015 got off to a rocky start.
The more China’s economy slows, the more pressure Beijing will have to stimulate it, although so far this has failed to put much of a floor under copper prices, said analyst James Glenn of National Australia Bank in Melbourne.    ‘You could see restocking ahead of Chinese New Year, and there are increasing chances the SRB (State Reserve Bureau) could take advantage of lower prices as well, which could support prices in this quarter,’ Glenn said.
‘(Still) in terms of real demand, we don’t see a lot turning around in the near term,’ he added.
The most-traded April copper contract on the Shanghai Futures Exchange was up 2.4 percent at 40,140 yuan ($6,414) a tonne by 0402 GMT.
Three-month copper on the London Metal Exchange traded up 0.4 percent at $5,516 a tonne, adding to 2 percent gains from the previous session.
Prices, however, are still within reach of a 5-1/2-year low of $5,339.50 a tonne plumbed last week.    China’s stockpiler plans to buy about 200,000 tonnes of refined copper in 2015 from the international market and may more than double the amount if global prices are low, three industry sources said last week.
China funds will be taking the pulse of consumer demand after the Lunar New Year, which begins Feb 19, before they decide whether to increase their short positions, fund managers and trading sources said in January.
U.S. economic growth also slowed sharply in the fourth quarter as weak business spending and a wider trade deficit offset the fastest pace of consumer spending since 2006.    Hedge funds and money managers raised their net short in copper contracts futures and options during the week to Jan. 27, U.S. Commodity Futures Trading Commission (CFTC) data showed on Friday.



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