METALS-Copper rises on Spain support prospects; US data eyed

Thu Oct 4, 2012 3:38am EDT

Related Topics

* Week-long holiday in China; ShFE closed
    * Pan Pacific offers $85/T 2013 copper premium to China
    * Coming up: euro zone ECB rate decision at
1145 GMT

 (Adds comment, detail; updates prices)
    By Melanie Burton
    SINGAPORE, Oct 4 (Reuters) - Copper rose on Thursday, as
investor's appetite for risk increased on prospects the European
Central Bank will offer fresh measures to support Spain, but
volumes remained low with China still on holiday.
    Signals that a economic recovery could be taking hold in the
United States kept losses in check ahead of Friday's key
non-farm payrolls report, while lingering worries over Europe's
economy and slowing growth in China equally capped gains.
    "The market is in a tug of war between macro signals --
quantitative easing in the West, developments in the euro zone
-- and the physical market which is going to carry on
disappointing," said James Luke, a Hong Kong-based commodities
analyst at China International Capital Corporation (CICC).
     "Overall we expect Q4 prices to continue to take cues from
the macro rather than the physical market. Prices will be well
supported but I don't expect physical demand to surprise on the
upside and that should limit prices relative to other more
purely investor-driven metals such as gold."
    Three-month copper on the London Metal Exchange 
climbed to $8,345 a tonne by 0713 GMT, up 0.66 percent from the
previous session when it slipped nearly half a percent to snap
four sessions of gains.    
    Prices rallied nearly 8 percent last month, reaching a 4-1/2
month high of $8,422 a tonne on Sept 19.        
    Shanghai Futures Exchange markets are shut this week due to
the holiday in China.
     European shares rose in early trade on Thursday, mirroring
gains in the United States and Asia, with investors positioning
for more soothing data and some clarity on Spain's likely aid
request during a European Central Bank press conference after
its rate verdict. 
    The ECB is expected to hold interest rates when it meets on
Thursday to allow time for new details on the health of the euro
zone economy and for Spain to ask for aid. 
    Still, growth worries continue to muddy the demand outlook
for metals.
    The euro zone's economic woes accelerated last month and
China's slowdown looked likely to extend to a seventh quarter,
surveys showed on Wednesday, while the United States provided a
bright spot with better-than-expected news on services and jobs.
 
    U.S. companies added more jobs than expected in September,
while activity in the vast services sector picked up, suggesting
the economy remained on track for modest growth ahead of
September's jobs figures on Friday. 
    "We think the slant of the market after the payroll numbers
on Friday will really be the action one should pay attention to.
For now look at continued back and forth as the market
consolidates terrific gains made since August," RBC Capital said
in a note.
    In Asia, the safe-haven dollar eased after the positive U.S.
data, easing pressure on metals. A stronger dollar makes
commodities more expensive for holders of other currencies.
    
    LOWER PREMIUM
    Pan Pacific Copper Co Japan's biggest copper
smelter, is offering a term copper premium of $85 per tonne for
clients in China for 2013 shipments, down from $100 in 2012, a
source familiar with the matter said.
    The lower premiums reflect slowing demand growth in the
world's top consumer of metals. 
     In industry news, private equity firm founded by Chinese
billionaire Yu Yong and a fund backed by state-owned China
Development Bank have offered to buy Australian-listed copper
explorer Discovery Metals Ltd, valuing the company at
about $850 million.
    The takeover offer for Discovery is the latest in a series
of small-to-mid-sized metals and mining deals to hit Asia in the
wake of sliding commodity prices, flagging a series of asset
sales and sector consolidation. 
   PRICES    
                                                                         
  Base metals prices at 0713 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8345.00     55.00     +0.66      9.80
  SHFE CU FUT JAN3    --          --        --        --
  HG COPPER DEC2     380.55      2.15     +0.57     10.75
  LME Alum          2105.75      3.25     +0.15      4.25
  SHFE AL FUT JAN3    --          --        --        --
  LME Zinc          2092.50     10.50     +0.50     13.41
  SHFE ZN FUT JAN3    --          --        --        --
  LME Nickel       18699.00    174.00     +0.94     -0.06
  LME Lead          2322.00     16.00     +0.69     14.10
  SHFE PB FUT         --          --        --        --
  LME Tin          22300.00    200.00     +0.90     16.15
  LME/Shanghai arb^    --
 
   Shanghai and COMEX contracts show most active months
 
 (Reporting by Melanie Burton; Editing by Joseph Radford and
Miral Fahmy)
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