METALS-Copper dips from two-month high; China, dollar support

Tue Dec 11, 2012 12:18pm EST

* China November copper output at record high of 531,000 T
    * Euro rises to session high against dollar after German ZEW survey
    * Investors eye two-day Federal Open Market Committee meeting

    By Susan Thomas and Stephen Eisenhammer
    LONDON, Dec 11 (Reuters) - Copper fell on Tuesday, as disappointing U.S.
trade deficit data prompted traders to take profits, but the metal was
underpinned by a weaker dollar and faster growth in factory output in big metals
consumer China.
    Investors were also focusing on a Federal Reserve meeting on Wednesday. The
U.S. central bank is expected to extend its asset purchase scheme and commit to
buy $45 billion of U.S. debt per month.
    Data out earlier showed the U.S. trade deficit widened in October as exports
suffered the biggest drop in nearly four years, indicating that slowing global
demand was spilling over into the already struggling U.S. economy.
 
    Three-month copper on the London Metal Exchange closed at $8,103 a
tonne, trimming gains from the previous session when it hit its highest since
Oct. 19 at $8,159 a tonne. It closed at $8,140 on Monday.
    Copper prices have risen more than 7 percent since mid November. 
    "I think what we're seeing is new activity coming into the base metals from
the long side. I don't think it's being done on the basis of fundamentals, it's
much more technical in nature," said Barclays analyst Gayle Berry.
    "Fundamentally the feedback from China is still pretty soft. Everything
apart from tin is in a surplus, stocks for most metals are rising, and there's
not really much indication of any significant improvement in Chinese demand."
    China's copper imports rose 13.5 percent in November from the previous
month. But the latest figures were boosted by the arrival of delayed shipments
after a week-long holiday in October and overall demand for the metal remains
weak.
    Imports had dropped 18.5 percent month-on-month in October  because of the
National Day holiday. 
    China's production of refined copper rose in November to a record high for
the second straight month, which would also tend to dampen prices. China
accounts for around 40 percent of global refined copper demand.
    "The rise is quite puzzling given that demand has yet to return to its
former level, while end users also have the option of tapping into large local
stockpiles that surely must be competitively priced," INTL FC Stone said in a
note. 
    However, China's economy, the world's second largest, may be on a bumpy road
to recovery.
    Economic data over the weekend showed factory output and retail sales rose
at their fastest pace in eight months in November, fuelling hopes that the
country is snapping out of a seven-quarter-long slide. 
    A weaker dollar also helped underpin base metals.
    The euro rose broadly after forecast-beating German data lifted sentiment
towards the currency while investors steered clear of the U.S. dollar before the
Fed's meeting. A weaker dollar makes metals priced in the currency less
expensive for holder of other currencies. 
    
    
    TIN FALLS AFTER SURGE
    Three-month tin fell on Tuesday after a 6 percent surge on Monday
that was driven by a 28 percent fall in shipments of refined tin from Indonesia,
the world's top exporter, in November from the previous month. 
    "We would expect tin prices to be fairly choppy over the next few days as
long-term, technical funds buy dips and trade/macro players look to sell any
rally," RBC said in a research note. 
    "In looking at the Indonesian export numbers, we would point out that
November 2011 saw a pretty dramatic drop in exports and then December saw heavy
export volumes, so in fact there has actually been a year-on-year increase," it
said in the note.
    Three-month tin closed at $22,970 per tonne from a last bid of
$23,090 on Monday.
    Battery material lead closed at $2,297 versus $2,298, within reach
of a 2012 peak of $2,329 a tonne. Inventories of the metal in warehouses
monitored by the LME fell 2,025 tonnes to 352,900 tonnes, the lowest in about a
month. 
    Three-month aluminium closed at $2,116 per tonne from a last bid of
$2,131, zinc at $2,080 from $2,085 a nd nickel at $17,800 from
$17,775.
 Metal Prices at 1707 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       367.50       -2.15     -0.58     344.75      6.60
  LME Alum      2116.25       27.25     +1.30    2020.00      4.76
  LME Cu        8092.25      -47.75     -0.59    7600.00      6.48
  LME Lead      2294.50       -3.50     -0.15    2034.00     12.81
  LME Nickel   17781.00        6.00     +0.03   18650.00     -4.66
  LME Tin      22950.00     1175.00     +5.40   19200.00     19.53
  LME Zinc      2076.00       -9.00     -0.43    1845.00     12.52
  SHFE Alu     15280.00      -65.00     -0.42   15845.00     -3.57
  SHFE Cu*     57850.00      -70.00     -0.12   55360.00      4.50
  SHFE Zin     15440.00      -35.00     -0.23   14795.00      4.36
 ** 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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