METALS-Copper dips on Greek deal uncertainty, U.S. budget talks

Wed Nov 28, 2012 12:30pm EST

* China manufacturing to show further growth in Nov -ANZ
    * Copper price moves subdued, eyes also on Fed meeting
    * U.S. single family home sales fall in October

    By Susan Thomas
    LONDON, Nov 28 (Reuters) - Copper fell on Wednesday as
investors shunned riskier assets on concerns about the details
of Greece's new debt deal and lack of progress in U.S. budget
talks aimed at averting automatic tax hikes and spending cuts in
    Lenders agreed to cut Greece's debt on Tuesday, preventing
an imminent bankruptcy, but some details of the deal are unclear
and investors worry it did not do enough to ensure the debt is
    There are also concerns about the need for the U.S. Congress
to reach a compromise to avoid $600 billion in tax increases and
spending cuts due to start in January, a combination known as
the fiscal cliff that could hurt the world's largest economy.
    Added to this, latest U.S. data showed new single-family
home sales fell slightly in October and the government revised
sharply lower its estimate for the prior month's sales, denting
optimism over one of the brighter sectors of the economy.
    Three-month copper on the London Metal Exchange was
last bid down 0.53 percent at $7,765 per tonne from $7,806.5 at
the close on Tuesday. Copper has risen in the previous four
sessions, and is up around 2 percent so far this year.
    "These moves today are not really anything to get too
excited about. The trend has been up in the past few days, but
it's nothing dramatic," said BNP Paribas analyst Stephen Briggs.
    "Apart from the Greece and U.S. budget issues, what is at
the top of people's minds is what will happen at the next Fed
meeting and whether we will be seeing after that full-scale
fresh quantitative easing, which is what the market would want
for these rallies to pick up steam."
    The U.S. Federal Reserve's next policy-setting meeting takes
place in two weeks. Some analysts believe the Fed should step up
its programme of quantitative easing in the new year, which
would spur economic growth, and in turn boost demand for metals
such as copper, used widely in construction and power.
    After rallying towards $8,500 in September, copper prices
are expected to retreat as new mine supply comes on line,
boosting a market surplus to 450,000 tonnes in 2014 from 100,000
tonnes next year, BNP Paribas said in a research note. 
    In a sign of hope for metals, Europe's biggest copper
smelter Aurubis said while demand for copper products
in the region was still weak, the downturn had halted and
business had stabilised. 
    And a revival in big metals consumer China's economy,
underpinned by renewed expansion in its manufacturing sector
into next year, should keep a floor under copper prices, ANZ
commodity analyst Natalie Robertson said.
    "Our expectations are that the manufacturing sector will
continue to pick up in November... which should be supportive
for market sentiment," she added.
    China's manufacturing sector saw expansion accelerate in
November for the first time in 13 months, preliminary results
from a factory survey showed last week, in a sign that the pace
of economic growth has revived after seven consecutive quarters
of slowdown. 
    China has also approved $7.87 billion in rail projects,
which will boost demand for metals such as nickel and zinc, used
in steel, as well as copper, used in cables. 
    "Yesterday saw some good buying as the (metals) complex
pushed above recent resistance. The moves as of late have been
positive for the entire complex as we had been looking quite
bleak during the early days of October," RBC said in a research
    "With zinc and lead both being above their respective
long-term moving averages they will remain in the spotlight as
the current metals in vogue." 
    Three-month zinc, used in galvanizing, closed down 
$1,987 per tonne from $1,993 at the close on Tuesday and nickel
 was lst bid down $16,980 a tonne from $16,930. Aluminium
 closed down at $2,000 a tonne from $2,009.
    Three-month lead ended down more than 1 percent at
$2,188 per tonne from $2,213 and tin closed down more
than 1 percent at $21,425 from $21,200.
 Metal Prices at 1712 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
  COMEX Cu       352.45       -1.20     -0.34     334.65      5.32
  LME Alum      1999.00      -10.00     -0.50    2230.00    -10.36
  LME Cu        7765.00      -15.00     -0.19    7375.00      5.29
  LME Lead      2188.00      -25.00     -1.13    2432.00    -10.03
  LME Nickel   16980.00       50.00     +0.30   18525.00     -8.34
  LME Tin      21420.00      220.00     +1.04   16950.00     26.37
  LME Zinc      1987.00       -6.00     -0.30    2560.00    -22.38
  SHFE Alu     15390.00       -5.00     -0.03   17160.00    -10.31
  SHFE Cu*     56230.00      -10.00     -0.02   59900.00     -6.13
  SHFE Zin     15095.00      -60.00     -0.40   21195.00    -28.78
 ** 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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