Copper rallies ahead of U.S. data, Europe and China manufacturing numbers

Copper rallied 2% on Tuesday following Mondays upbeat manufacturing data from Europe and China and as numbers may show on Tuesday that the U.S. manufacturing sector expanded further in August. Chinas services sector grew steadily in August.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December rose by 1.84% to $3.291 per pound at 8:53 GMT. Prices held in range between days high and low of $3.316 and $3.287 per pound respectively. The industrial metal has advanced 1.6% so far this week after shedding 3.6% in the preceding two five-day periods.

Copper extended gains ahead of U.S. data due later in the day that is expected to show the countrys manufacturing sector has expanded in August, but with a slower pace than in July. The ISM Manufacturing index is expected to have fallen in August to 54.0 from a two-year high of 55.4 in July, while the Markit U.S. Manufacturing PMI should have remained flat at 53.9. Values above 50 indicate activity expansion in the respective sector.

The industrial metal was also well supported amid signs of consistent recovery of Europe and Chinas manufacturing activity. The Chinese National Bureau of Statistics reported on Sunday that the country’s manufacturing Purchasing Managers’ Index surpassed forecasts for a jump to 50.6 according to a Reuters poll and rose to 51.0 in August, the highest since last April, from 50.3 in July.

The government agency reported on Tuesday the countrys services sector grew steadily in August as domestic demand advanced. Chinas non-manufacturing PMI slipped slightly to 53.9 from Julys 54.1 and aligned to Junes reading.

Cai Jin, a vice head of the China Federation of Logistics and Purchasing (CFLP), which compiles the index on behalf of the NBS, said in a statement: “The non-manufacturing sector grew steadily in August. The rise in new orders set a good foundation for growth in the next few months.”

Meanwhile, according to a separate private survey by HSBC and Markit Economics, the HSBC Purchasing Managers’ Index posted a surge to 50.1 in August, marking a major improvement from July’s 11-month low of 47.7 in July and ending a three-month declining cycle. Chinese manufacturers signaled a slight expansion in growth that was based on improving market conditions.

In economic news from Europe on Monday, both Sweden and Norway’s manufacturing PMI rose more than projected to 52.2 and 53.0 respectively. Spain’s manufacturing sector marked an expansion for the first time in two years and surged to 51.1 in August from 49.8 in July, outperforming analysts’s projections for a reading of 50.1. France’s manufacturing sector marked an expected contraction as the country’s PMI remained flat at 49.7, meeting projections. Germany and Switzerland’s indicators remained in the expansion zone but posted a retreat from the preceding month, falling to 51.8 and 54.6 in August from 52.0 and 57.4 in July respectively.

However, Great Britain’s Manufacturing CIPS rallied to 57.2, the highest since 2 1/2 years, surpassing expectations for a surge to 55.0. This was the biggest advance in nineteen years. July’s reading was revised upward to 54.8 from an initial reading of 54.6.

The general Euro zone’s Final Manufacturing PMI surpassed analysts’ expectations for remaining unchanged at 51.3 and rose to 51.4, indicating the the single currency bloc’s economic activity is consistently improving.

Chae Un Soo, a metals trader at Korea Exchange Bank Futures Co. in Seoul., said for Bloomberg: “After the good manufacturing data from China and Europe yesterday, the market is focusing on when the Fed will start to taper quantitative easing.”

The Federal Open Market Committee is scheduled to meet on September 17-18 and reassess its U.S. economic recovery forecast. According to a Bloomberg survey of analysts conducted in August, 65% of economists expected the Federal Reserve to pare its $85 billion bond purchases per month program in September.