METALS-Copper dips on dollar, US budget talks anxiety

Thu Dec 6, 2012 11:11am EST

* Traders eye U.S. jobs report, China industrial output this
week
    * U.S. "fiscal cliff" negotiations worry
    * European Central Bank keeps rates on hold

    By Susan Thomas
    LONDON, Dec 6 (Reuters) - Copper dipped on Thursday as the
dollar rose and the euro fell after the European Central Bank
sharply downgraded its outlook for the region's economy, and on
investor anxiety over the slow progress in budget negotiations
in the United States.
    The ECB said the euro zone economy is likely to shrink next
year as it has in 2012, downgrading its outlook after holding
interest rates at a record low of 0.75 percent. 
    The euro extended its decline against the dollar after
comments from ECB President Mario Draghi stoked expectations of
an interest rate cut. A stronger dollar makes metals priced in
the U.S. currency more expensive for holders of other
currencies. 
    Analysts said markets would now be focusing on U.S.
employment data on Friday.
    "Base metals markets will be looking towards the non-farm
payrolls tomorrow, that is going to be instrumental in showing
how the labour market is doing in the United States, and that is
important for the economy in general," Danske Bank analyst
Christin Tuxen said.
    Three-month copper on the London Metal Exchange was
$8,061 a tonne at 1528 GMT, reversing gains from the previous
session when it hit its highest since Oct. 19. It closed at
$8,065.25 on Wednesday. Prices are up 6 percent so far this
year.
    "We will continue to watch the Shanghai Composite Index and
news regarding the fiscal cliff as leading indicators for copper
prices and whether the current rally can be sustained," RBC said
in a research note.
    With about three weeks remaining before steep tax hikes and
budget cuts in the United States that comprise the so-called
fiscal cliff are set to begin, discussions continued to be a key
focus for investors. 
    While Republican leaders in the House of Representatives
insist raising tax rates on the rich is an impossibility, some
Republican lawmakers now see it as inevitable to avoiding the
fiscal cliff of severe tax hikes and spending cuts set to start
Jan. 1.
  
    
    
    CHINA
    Metals prices had also firmed on signs demand is improving
in top consumer China, despite record stockpiles.
    China's large copper smelters are offering 2013 exports of
copper at cheaper premiums as they compete with major suppliers
such as top world producer Codelco, boosting supply in Asia, the
smelters said on Thursday. 
    Annual growth in China's factory output, investment and
retail sales may have gained pace in November thanks to recent
pro-growth policies, a Reuters poll showed, reducing the chances
for further policy support as inflation picks up.
 
    In other metals, tin rose 0.5 percent to $21,849 
f rom $21,745 at Wednesday's close, while zinc was up 0.5
percent at $2,036 f r om $2,027.
    Lead was $2,225 from $2,239 and aluminium 
was $2,108 from $2,105. N ickel was $17,472 from $17,550.
    
 Metal Prices at 1544 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       367.25       -0.25     -0.07     344.75      6.53
  LME Alum      2108.00        3.00     +0.14    2020.00      4.36
  LME Cu        8073.00       -2.00     -0.02    7600.00      6.22
  LME Lead      2224.50      -14.50     -0.65    2034.00      9.37
  LME Nickel   17462.00      -88.00     -0.50   18650.00     -6.37
  LME Tin      21805.00       60.00     +0.28   19200.00     13.57
  LME Zinc      2034.75        7.75     +0.38    1845.00     10.28
  SHFE Alu     15330.00      -70.00     -0.45   15845.00     -3.25
  SHFE Cu*     57340.00     -390.00     -0.68   55360.00      3.58
  SHFE Zin     15285.00      -65.00     -0.42   14795.00      3.31
 ** 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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