Chinese data gives a perk to moly

Tin and copper traded just beneath their lifetime peaks on Monday, shrugging off gains in the US dollar after a surprise jump in Chinese imports last month boosted investor sentiment.

Three-month LME copper traded as high as $10,117 per tonne on Monday, while lead soared through the $2,600 barrier and tin accelerated to $32,099 per tonne, as traders interpreted the latest Chinese trade data as bullish.

A weakening in the growth of the Chinese economy is not visible at least at the start of the year, Commerzbank wrote on Monday. If the current import momentum is sustained, China is set to remain a key driver of metal prices this year too.

Chinese copper imports rose 5.7 percent last month (25 percent year-on-year) to 364,240 tonnes last month - the highest figure ever registered in January - defying analysts expectations of a decline in the world s top metals consumer.

The dollar strengthened against a basket of currencies, trading at 1.3455 against the euro, as investors grew sceptical that European finance ministers will agree on debt-reduction targets in meetings this week.

In news, the London Metal Exchange and Singapore Exchange will begin trading copper, zinc and aluminium futures on the Singapore bourse tomorrow.

There is no major economic data scheduled in the US on Monday. This morning, eurozone industrial production fell by a forecast 0.1 percent in December, although the previous month's figure was upgraded to show 1.4 percent from 1.2 percent.

MORE THAN SPECULATORS

Speculators increased their bets on rising prices quite sharply in the week up to February 8, with copper net longs rising by 14 percent to 36,000 contracts - the highest level in five weeks - while net long positions are only 6 percent shy of the record hit at the end of last year, according to analysts at Commerzbank.

But others believe that fundamental demand - not speculators - is fuelling metal price rally. Indeed, some investment vehicles have seen outflows (such as physically backed ETFs), while CTFC and LME open interest data indicate that there is not a significant overhang of long positions.

The perception that a wave of speculative money is the driving force behind the run-up in base metal prices is misplaced, in our view, analysts from Barclays Capital wrote on Friday.

They added, Something is brewing, and we believe it is the beginning of a big increase in demand, which, together with a newfound confidence in the sustainability of economic growth, leads us to believe the route being mapped out is one of higher price.

Copper traded at $10,086, up $125, while inventories rose by 5,050 to 401,775 tonnes, the highest since August 25, 2010. The red metal hit a record high of $10,160 per tonne on Tuesday, February 8, and Barclays Capital forecasts that prices will average more than $13,000 per tonne by the end of the year.

Aluminium traded at $2,510, up $14, while cancelled warrants increased by 48,500 tonnes to 286,075, due to large movements in Chicago and Detroit.

The metal hit a two-year high of $2,575.25 on Wednesday, February 9, but is still far below its all-time record of $3,380 attained back in July 2008.

In news, Russia s United Company Rusal , the world's largest aluminium producer, said on Monday it planned to lift aluminium production by 2 percent in 2011 to meet rising demand, and that an aluminium exchange traded fund (ETF) could be launched soon in the UK, Reuters reported.

Nickel traded at $28,743 per tonne, up $418, while zinc traded at $2,497, up $32.

Lead traded at $2,580 per tonne, up $20, the highest since January 6, while cancelled warrants increased by a massive 81 percent to 5,475 tonnes.