METALS-Copper rebounds from 3-mo lows, traders focus on supply
* Copper steadies above $8,000/T as risk assets climb * LME copper for tom-next at $40 backwardation * Rio Tinto mined copper output falls 13 pct * Coming up: US jobless claims, housing data Thursday By Chris Kelly and Melanie Burton NEW YORK/LONDON, April 17 (Reuters) - Copper topped $8,000 a tonne on Tuesday, rebounding from three-month lows a day earlier, as euro zone debt worries eased and a surprise drop in Rio Tinto's copper output brought the red metal's tight supply pipeline back into focus. Copper pushed higher alongside a broader risk-on rally in global equities and the euro after a smooth Spanish bond sale and upbeat German economic data boosted investor confidence and boosted hopes the euro zone was recovering. Further upside was unlikely as near-term demand prospects remained unclear given the growing fears of slowing economic growth in key consumer China and a fragile economic outlook from the International Monetary Fund (IMF). "There's still a lot of uncertainty with respect to Chinese demand," said Steve Platt, futures analyst with Archer Financial Services in Chicago. "There's been a lot of pressure on the commodity indexes recently overall, and copper is indicative of that weakness. This market seems like it's working in a corrective phase to the downside ... as long as we hold below the $3.73 to $3.75 ($8,223-$8,267/tonne) area, we could possibly see some further weakness." London Metal Exchange (LME) three-month copper ended up $70 at $8,050 a tonne, recovering from Monday's plunge to $7,885.25, its lowest since early January. In New York, the COMEX May contract settled up 1.90 cents at $3.6470 per lb, near the upper end of its $3.5845 to $3.65455 session range. Despite its slide in early April, that saw prices of copper lose more than 9 percent of their value, the metal is still up about 5 percent this year. COMEX copper volumes were heavier at more than 90,500 lots in late New York trade, up over 40 percent from the 30-day average, according to preliminary Thomson Reuters data. Copper received a boost from a drop in the dollar against a basket of currencies, a relationship that moved to its strongest since March 8. "What we see in copper prices today is just a recovery move which could last a few days," said Daniel Briesemann, analyst at Commerzbank. "But given that the debt crisis in the euro zone seems to be back in focus and given the higher risk aversion and growing uncertainty this is likely to only be a temporary move and we still expect prices might go down again very quickly." Global growth is slowly improving as the U.S. recovery gains traction and dangers from Europe recede, but risks remain elevated and the situation is very fragile, the IMF said on Tuesday. In industry news, Rio Tinto reported worse-than-expected falls in iron ore, copper and coal production in the first quarter after it was hit by bad weather, knocking the global miner's shares on Tuesday. Mined copper output fell 13 percent to 119,500 tonnes against analysts' forecasts of more than 140,000 tonnes. The global copper market is seen in a 180,000-tonne deficit this year, according to a poll of 19 analysts by Reuters in April. With the supply-side still underperforming, some industry players were betting on the demand side. Chinese copper demand will grow a little under 7 pct this year and more positive signs of U.S. demand will help offset the impact of lingering European economic woes, the head of Xstrata's copper unit Charlie Sartain said on Tuesday. In a note to clients, Barclays Capital said investors sold a net total of $2.2 billion in commodity investments in March, and persistent outflows from index swaps indicated the outlook is uncertain for the rest of the year. The March outflow compared with an inflow of $6.2 billion in February, and the first-quarter inflow still amounted to $6.9 billion, the strongest quarter in a year, the UK bank said. SHORT TERM SQUEEZE Glencore International is holding a dominant long position in the London copper market, trade sources said on Monday, as tight supplies took the premium paid by investors for cash metal over benchmark three-month futures to its highest in 3-1/2 years. The squeeze on nearby copper supply for April continued on Tuesday, highlighted by skyrocketing nearby premiums. Copper for tomorrow/next day delivery - the cost of rolling the position for a day from the third Wednesday prime prompt day - shot to its highest in more than two years to $40 from $19 earlier, reflecting a lack of available supply. The premium for cash copper shot to as high as $95 per tonne against the benchmark three-month contract. Metal Prices at 1814 GMT Metal Last Change Pct Move End 2011 Ytd Pct move COMEX Cu 364.65 1.85 +0.51 343.60 6.13 LME Alum 2076.00 11.00 +0.53 2020.00 2.77 LME Cu 8050.00 70.00 +0.88 7600.00 5.92 LME Lead 2073.00 -5.00 -0.24 2035.00 1.87 LME Nickel 17825.00 325.00 +1.86 18710.00 -4.73 LME Tin 21550.00 150.00 +0.70 19200.00 12.24 LME Zinc 1991.00 -7.00 -0.35 1845.00 7.91 SHFE Alu 16050.00 0.00 +0.00 15845.00 1.29 SHFE Cu* 56530.00 -190.00 -0.33 55360.00 2.11 SHFE Zin 15370.00 25.00 +0.16 14795.00 3.89 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
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