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US data gives SHFE copper a slight nudge

By Michael Bellart (Global Times)

08:28, May 03, 2012

Domestic copper prices opened high on the back of strong manufacturing data out of the US and China, but faced headwinds throughout the session.

The most active copper contract on the Shanghai Futures Exchange (SHFE), for August delivery, added 0.55 percent to close at 58,780 yuan ($9,330.16) per ton. The contract opened 0.77 percent above last Friday's closing price. The SHFE and other financial markets on the Chinese mainland had been closed since Friday for the May Day holiday.

SHFE copper's opening gains trailed an increase of more than 1 percent on the corresponding future contract on the London Metal Exchange (LME) over the same period. The gulf between the two contracts continued to widen over the holiday. Minus China's 17 percent value-added tax, SHFE copper was trading at a $400 per ton discount to its LME counterpart as of 3 pm Beijing time yesterday.

Nonetheless, the contract ended up for the day after the release Tuesday night of better than expected results from a survey conducted by the US's Institute of Supply Management's (ISM), though as with China's official purchasing managers index (PMI), the data evoked mixed reactions from the markets.

"We believe the muted response was because regional PMIs in the US did not support the rise in the national ISM manufacturing survey," ANZ commodity analyst Natalie Robertson wrote yesterday.

China released its official PMI for the manufacturing sector Tuesday. The index rose to 53.3 in April, up from 53.1 in March.

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