METALS-Copper steadies as U.S. unemployment falls

Fri Oct 5, 2012 12:42pm EDT

* Euro firm near two-week high versus the dollar
    * Lengthening queues at warehouses boost aluminium premiums
    * Data shows U.S. unemployment rate falls in September

    By Silvia Antonioli and Maytaal Angel
    LONDON, Oct 5 (Reuters) - Copper steadied on Friday after a
surprise drop in the U.S. jobless rate that signalled economic
improvement which could boost metals demand offset fears of an
interruption of looser monetary policies in the U.S.
    Data showed the unemployment rate dropped in September to
its lowest level since January 2009, even as Americans came back
into the labour force to resume the hunt for work.
 
    Benchmark copper on the London Metal Exchange (LME)
ended at $8,295 a tonne, not far from a close of $8,305 on
Thursday.
    The metal, widely used in power and construction, was on
track for a 1.5 percent increase this week, and it has gained
almost 10 percent in the past month, helped by actions by
central banks in the U.S., Europe and Japan to loosen their
monetary policy in an attempt to boost growth.
    Some players, however, feared signs of an improving economy
would push central banks to interrupt their stimulus programs.
    "The data is very positive but copper is stuck between the
good employment news on the one side and the fact that an
economic improvement could lead to a revision of the looser
monetary policies already in October," said T-Commodity
consultant Gianclaudio Torlizzi.
    "There is no doubt that copper has soared in the last two
weeks purely because of the 'free money' but there are no signs
of a demand improvement from China."
    Sluggish metals demand from top buyer China, which makes up
for 40 percent of the global copper demand, kept a lid on the
rally seen in the last few weeks.
    Helping metals, the euro hit a 2-week high against the
dollar as risk sentiment improved following the U.S. jobs
report. 
    The single currency had started to rise on Thursday after
ECB President Mario Draghi said everything was in place for the
bank to buy the bonds of troubled euro zone countries such as
Spain and conditions linked to it need not be punitive.
 
    A stronger euro makes dollar-priced metals cheaper for
European and other non-U.S. investors.
    Taking some shine off global growth prospects though, a
German newspaper report said the International Monetary Fund
would lower its forecasts for global economic growth to 3.3
percent this year and 3.6 percent in 2013 from earlier forecasts
of 3.4 percent and 3.9 percent. 
    
    CHINESE DIET
    Trading volumes were low this week as a holiday in China
kept a large number of players away from the market.
    China's appetite for metals however may be muted even when
it returns to the market on Monday given prices are $100 higher
this week, a trader in Singapore said, with a U.S. holiday on
Monday also likely to keep trading quiet.
    In other metals, aluminium, used in packaging and 
carmaking, closed at $2,110 a tonne from $2,112 on Thursday.
    Aluminium premiums - money paid over the benchmark LME cash
price to secure immediate delivery of physical metal - have been
on a steady uptrend since the beginning of the year.
    "Inventory financing and cancelled warrants are driving
aluminium premiums higher by lengthening the queue to obtain
aluminium from LME warehouses," Commonwealth Bank said in a
research note.
    "We expect inventory financing to keep aluminium premiums
rising and suspect that smelters that appear uneconomical on an
LME aluminium cash level are remaining afloat by claiming some
part of the premium in their pricing."
    Tin ended at $22,400 from $22,500 at Thursday's
close, while zinc, used to galvanize steel, closed at
$2,075 from $2,065.
    Battery material lead closed at $2,288 from $2,290.5
and stainless-steel ingredient nickel at $18,300 from
$18,675.
 Metal Prices at 1622 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in
 yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd
 Pct
 
 move
  COMEX Cu       378.05       -0.70     -0.18     334.65    
 12.97
  LME Alum      2110.00     -102.00     -4.61    2230.00    
 -5.38
  LME Cu        8295.00      -10.00     -0.12    7375.00    
 12.47
  LME Lead      2286.00       -4.50     -0.20    2432.00    
 -6.00
  LME Nickel   18280.00     -395.00     -2.12   18525.00    
 -1.32
  LME Tin      22375.00     -125.00     -0.56   16950.00    
 32.01
  LME Zinc      2075.00       10.00     +0.48    2560.00   
 -18.95
  SHFE Alu     15760.00       65.00     +0.41   17160.00    
 -8.16
  SHFE Cu*     59770.00      670.00     +1.13   59900.00    
 -0.22
  SHFE Zin     15680.00      100.00     +0.64   21195.00   
 -26.02
 ** 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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