METALS-Copper pushes higher with broader risk assets

Mon Feb 27, 2012 2:35pm EST

* Copper bounces to firm finish with U.S. equities
    * Copper posts second straight close above 200-day moving average
    * Stoppage at Indonesian mine underpins copper prices
    * Coming up: U.S. Durable Goods Orders data for January on Tues.

    By Chris Kelly and Maytaal Angel	
    NEW YORK/LONDON, Feb 27 (Reuters) - Copper erased earlier losses to
end higher on Monday, buoyed by positive momentum in other risk asset markets, a
drop in the price of crude oil, and strengthening technical signals that could
keep prices heading higher in the days ahead.	
    Volumes were active at the start of the week as the market gyrated above and
below the unchanged level in early dealings, reacting to weaker European markets
and the persistent concerns about European debt, as well as fresh worries about
higher oil prices and the impact they could have on an already fragile global
economic recovery.	
    But copper's late-session move into positive territory held with the help of
a similar reversal in U.S. equities that allowed prices of the red metal regain
footing above the 200-day moving average, a key level of technical resistance
that has acted as both a line of support and an upside barrier for the better
part of February.	
    "That has been a significant line on the sand," Ralph Preston, futures
analyst with HeritageWestFutures.com in San Diego, California, said of the
200-day, which came in at around the $3.83 level.	
    "We're now pushing $3.89 ... anything over $3.88 today is projecting a move
to $3.95."	
    London Metal Exchange (LME) benchmark copper rose $5.50 to end at
$8,536 a tonne.	
    In New York, the most-active May COMEX contract settled up 1.90 cents
at $3.8890 per lb, near the upper end of its $3.8315 to $3.8965 session range.	
    	

    Trading volumes tipped 82,500 lots in late New York business, nearly 20
percent above the 30-day norm, according to preliminary Thomson Reuters data.	
    The day began with more selling tied to the festering debt crisis in Europe
after a weekend meeting of the Group of 20 leading economies failed to reach
agreement on making more funds available to Europe and said EU leaders must
commit more money to fight the debt crisis at their summit this week.	
    The comments piled pressure on Germany to drop its opposition to a bigger
European bailout fund. 	
    "We had a good run-up last week after the Greek bailout was agreed but the
markets are now shifting their focus towards the debate over the size of the
European fund," said metals analyst Edward Meir at INTL FCStone. 	
    "It is also important to keep an eye on Brent oil prices; as it has
got the potential to slam all other commodities. If it moves $10 higher it
starts to become quite serious because you get inflationary pressures and rising
input costs for metals."	
    Rising oil prices, which touched 10-month highs last week on worries over
disruption to Middle East supplies, stirred the spectre of global recession,
with Europe having the most to fear as its brittle economy falters. 	
    But copper pushed higher with bullish investors flagging support from a
tighter supply outlook, highlighted by another stoppage at the Grasberg mine in
Indonesia.	
    Freeport McMoRan Copper & Gold Inc.'s has told workers at the mine
not to work due to safety concerns linked to labour unrest, a union official
said on Sunday. 	
    "The supply side is very strained; we are not getting more material out but
the focus currently remains on demand," Meir said.	
    	
    CHINA DEMAND FOCUS	
    The demand focus in the copper market has, and will likely continue to be,
turned squarely on China, whose near 40-percent intake of the world's copper,
can either fuel or undermine any rally in the metal.	
    So far this year, China's copper appetite has been a disappointment.	
    Highlighting this disappointment, weekly data last Friday showed copper
stocks in Shanghai warehouses remained near levels last seen in 2002, at more
than 216,000 tonnes .	
    "China is probably stockpiling, and demand in China, by Chinese standards,
is relatively weak at the moment, (so) it becomes harder to justify these price
levels," said BNP Paribas strategist Stephen Briggs.	
    Concerns about a slowdown in the Chinese economy have been overblown, the
chief executive of Teck Resources  said on Monday.	
    "We are often asked about our view of the Chinese economy and whether we
expect a hard landing or a soft landing, judging by the recent economic data and
the Chinese government's recent actions on bank reserve ratios, we think neither
will occur," said Lindsay, while addressing the BMO Global Metals and Mining
Conference in Hollywood, Florida.	
    "With recent gross domestic product (GDP) growth at 8.9 percent and
industrial production growth at 12.8 percent, these numbers look very good
indeed," Lindsay said.	
    China's National Bureau of Statistics was scheduled to release the official
manufacturing activity number on Thursday, and if it confirms last week's poor
HSBC flash data reading, copper may be prone to some selling. 	
    Copper also benefited from another round of upbeat U.S. data showing signed
contracts for home resales rose to a nearly two-year high in January, further
evidence of a budding recovery in its housing market. 	
 	
 Metal Prices at 1910 GMT
                                                                    
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       386.90        0.60     +0.16     343.60     12.60
  LME Alum      2331.00        3.00     +0.13    2020.00     15.40
  LME Cu        8536.00        5.50     +0.06    7600.00     12.32
  LME Lead      2247.00       39.00     +1.77    2035.00     10.42
  LME Nickel   20155.00      -20.00     -0.10   18710.00      7.72
  LME Tin      23705.00     -145.00     -0.61   19200.00     23.46
  LME Zinc      2097.00       17.00     +0.82    1845.00     13.66
  SHFE Alu     16255.00       95.00     +0.59   15845.00      2.59
  SHFE Cu*     60400.00      780.00     +1.31   55360.00      9.10
  SHFE Zin     15950.00      145.00     +0.92   14795.00      7.81
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
Comments (0)
This discussion is now closed. We welcome comments on our articles for a limited period after their publication.