METALS-Copper guarded ahead of Spanish bond auction

Thu Apr 19, 2012 3:46am EDT

Related Topics

* Spain to auction two- and 10-year bonds
    * China may raise liquidity via open market operations, cut
banks' required reserves
    * Coming up: U.S. jobless claims, weekly; 1230 GMT

 (Updates prices, adds quotes, details)	
    By Carrie Ho	
    SHANGHAI, April 19 (Reuters) - London copper futures eased
on Thursday in cautious trade ahead of a key bond auction in
Spain as growing worries of the resurgence of the euro zone debt
crisis dimmed the outlook for global raw material demand.	
    Three-month copper on the London Metal Exchange 
ticked up 0.3 percent to $8,070 a tonne by 0734 GMT, after
ending flat on Wednesday.	
    The most-active July copper contract on the Shanghai Futures
Exchange shed 0.3 percent t o 57,670 yuan ($9,100) a
tonne, after gaining more than 2 percent in the previous
session.	
    "Copper prices haven't moved much as everyone takes on a
wait-and-see attitude ahead of the Spanish bond auction," said
Great Wall Futures analyst Li Rong. "Balancing this piece of
potentially negative news are investor hopes that Beijing will
inject more liquidity into the economy and further loosening
monetary policy."	
    Investors are eyeing an auction of two- and 10-year Spanish
bonds later on Thursday. Spain's 10-year government bond yield
shot above 6 percent earlier this week, raising fears the
country would not be able to manage its public financing and
would have to turn to a global bailout. 	
    Hopes for more Chinese monetary easing were also stirred by
a report by China's official Xinhua news agency that the country
may increase liquidity via open market operations and a cut in
banks' required reserves to steer the economy to a soft
landing. 	
    "There's a lack of trading direction today and that is
reflected in the small movements in prices," said CIFCO analyst
Zhou Jie.  	
    "As long as stockpiles remain high in China, copper
consumers will continue to stay away even if prices slip. It's
not a matter of price levels now, but a matter of confidence. We
need something to boost morale - be it news of the economy
picking up, or of stockpiles going down," he added.	
    On a positive note, the head of the International Monetary
Fund said member countries had committed $316 billion toward new
IMF resources to help contain the debt crisis in the euro zone.
 	
    But lingering fears over a slowing global economy remain, as
data showed Spain's banks continued to battle sliding house
prices and a looming recession. Their bad loans rose to their
highest level since October 1994 in February, to stand at 8.2
percent of their credit portfolios. 	
    Things look bleak for holders of short positions for April
delivery. According to the last report at London's 5 p.m. close,
cash copper was bid at an $80 to $85 premium to the three months
contract on Wednesday, down from $114 in the previous session.
CMCU0-3 	
    "The backwardation has eased but does not appear to have
gone away as there is still tightness right through to April 27.
It seems that the short positions have been rolled over to
nearby dates," said one LME trader.	
    "Since the backwardation is due to certain parties holding a
dominant long position on the LME and not due to an actual
pickup in real demand, I think the squeeze will persist into
May," said a Singapore-based trader. 	
    	
                                                               
  Base metals prices at 0734 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8070.00     20.00     +0.25      6.18
  SHFE CU FUT JUL2    57670      -150     -0.26      3.67
  LME Alum          2068.00      9.00     +0.44      2.38
  SHFE AL FUT JUL2    16075       -35     -0.22      1.48
  HG COPPER MAY2     364.60      1.50     +0.41      6.11
  LME Zinc          2000.00      8.00     +0.40      8.40
  SHFE ZN FUT JUL2    15470       -65     -0.42      4.56
  LME Nickel       17792.00    162.00     +0.92     -4.91
  LME Lead          2055.00     10.00     +0.49      0.98
  SHFE PB FUT         15660       -75     -0.48      2.42
  LME Tin          21052.00     52.00     +0.25      9.65
  LME/Shanghai arb    1861
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE 
 third month
 ($1 = 6.3028 Chinese yuan)	
	
 (Reporting by Carrie Ho; Editing by Manolo Serapio Jr. and Ed
Davies)
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