Copper Trims Losses in Shanghai on Chinese Manufacturing Data

By Glenys Sim

Nov. 2 (Bloomberg) -- Copper trimmed losses in Shanghai after two separate reports showed China’s manufacturing in October expanded at the fastest pace in 18 months, boosting the outlook for metals demand.

Manufacturing in China, the world’s largest metals user, grew to a seasonally adjusted 55.4 from 55 in September, according to a purchasing managers’ index released by HSBC Holdings Plc today. The government-backed PMI released yesterday rose to 55.2. A reading above 50 indicates expansion.

“If you examine the data, you’ll find that exports are falling at a slower rate, while employment is on the rise,” said He Ruiyan, head of research at Xiamen International Trade Futures Co. “These are encouraging numbers.”

January-delivery copper on the Shanghai Futures Exchange ended the day 1.5 percent lower at 50,520 yuan ($7,399) a metric ton. Earlier, the most-active contract lost as much as 2.2 percent.

Copper for delivery in three months on the London Metal Exchange gained 0.5 percent to $6,515 at 3:52 p.m. in Singapore, trimming a decline of 2.8 percent on Oct. 30.

An index of Chinese export orders increased to the highest level since June 2007 and job creation was the strongest since the survey began in April 2004, according to the HSBC report. The government-backed PMI also showed gains in overseas demand.

Slowing Stimulus

Still, the data raised speculation stimulus measures may be reduced in the coming months. The $586 billion Chinese government spending plan spurred raw material purchases, driving copper imports to record levels and doubling prices this year.

“The markets have been holding up well because of the various stimulus packages around the world,” Liu Biyuan, an analyst at GF Futures Co., said from Guangzhou today. “Some investors are beginning to doubt the sustainability of the recovery if some of those measures are being taken away.”

Among other LME-traded metals, aluminum was little changed at $1,910 a ton, zinc gained 0.6 percent to $2,173 a ton and lead slid 0.7 percent to $2,290 a ton. Nickel dropped 0.8 percent to $18,100 a ton, while tin hadn’t traded as of 3:58 p.m. in Singapore.

To contact the reporter for this story: Glenys Sim in Singapore at gsim4@bloomberg.net