Shanghai copper rallies for 7th day, LME jumps
China refined copper imports hit record in February
U.S. Treasury plan to buy toxic assets lifts sentiment
Shanghai zinc, aluminium hit 5 pct daily limit
Copper surged to multi-month highs on Monday, supported by hopes China would continue to build stocks and a U.S. plan to help rid banks of up to $1 trillion in toxic assets which should aid recovery in demand for the industrial metal.
An official of the Obama administration said the government will put in $75 billion to $100 billion from its bailout fund to partner with private investors and buy troubled assets from banks, a long-awaited bid to tackle the heart of the credit problem.
"Obviously the contagion is looking to get out of hand so they're trying as much as they can at it, and this might be something that would actually support base metals prices," said Jonathan Barratt, managing director at Commodity Broking Services in Sydney.
"At the moment it's about pure perception."
China's refined copper imports surged 50 percent on month to a record 270,948 tonnes in February, according to Customs figures, reflecting efforts by fabricators and the State Reserves Bureau (SRB) to push up inventories.
The surge in imports of refined copper were largely due to "very tight copper scrap availability in China as well as consumer restocking and possibly also SRB buying," said analyst Yingxi Yu at Barclays Capital in Singapore.
"All these are leading to firmer domestic prices relative to international prices and this price spread between the two has made it attractive for imports."
"And this means copper prices will remain at least above 31,000 yuan for two or three more months," said Shao Hebin, analyst at Great Wall Futures in Shanghai.
Shanghai copper for June delivery jumped 1,500 yuan ($220) to 34,020 yuan a tonne by 0618 GMT. The contract peaked at 34,250 yuan earlier, just a tad off its daily limit of 34,260 yuan, its highest since Oct. 22.
Extending its rally into a seventh session, Shanghai copper has now gained more than 17 percent for the period.
Three-month copper on the London Metal Exchange climbed $160 to $4,115 a tonne. It touched a high of $4,135 earlier, its best level since Nov. 10.
Some analysts say it may be premature to say that real demand in China, the world's top copper consumer, is recovering strongly with most of its purchases likely done for strategic stockpiling.
SRB, China's commodity buyer, could buy up to 900,000 tonnes of copper, according to investment bank Macquarie, in addition to the 300,000 tonnes of the industrial metal that it has already booked.
"My own view is SRB will buy another 300,000 tonnes but it could wait until the price goes below 30,000 yuan," said Shao at Great Wall Futures.
Shao said arbitrage trading -- when traders take advantage of differences between prices on different exchanges -- is also supporting copper prices.
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