METALS-Copper steady on uncertainty over U.S. fiscal cliff

Mon Dec 17, 2012 6:02am EST

* Macro data improves but no fundamentals progress yet-analyst
    * Nearby tightness in aluminium intensifies
    * Coming up: New York Fed survey for Dec; 1330 GMT

    By Silvia Antonioli
    LONDON, Dec 17 (Reuters) - Copper was little changed on Monday,
consolidating gains after a five-week winning streak, on uncertainty over the
ability of the United States to avert a "fiscal cliff" that could slow growth
and metals demand globally.
    Benchmark copper on the London Metals Exchange traded at $8,055.25 at 1021
GMT, little changed from $8,065 at the close on Friday.
    U.S. House of Representatives Speaker John Boehner offered to accept a tax
rate increase for the wealthiest Americans, knocking down a key Republican road
block to a deal resolving the so-called fiscal cliff of tax hikes and spending
cuts. 
    Investors, however, felt that no significant enough progress has been made
in the negotiations as yet.
    The metals market found some support in Friday's data pointing to growth in
China's vast manufacturing sector and in U.S. factories activity but this still
had to translate in an improvement in metals fundamentals. 
    "This morning you could argue that there is a small support from hopes of a
fiscal cliff resolution but the market is still consolidating in a very narrow
range because people are waiting for fundamentals signals to kick off; we still
haven't seen that. It will probably continue like this until there is an
agreement in the U.S. to avoid the fiscal cliff," VTB Capital analyst Andrey
Kryuchenkov.
    "We have got to see the stock shrinking in China, we have got to see
premiums spiking, a narrowing contango at the front end of the curve in London
and China and that will not happen until the start of next year anyway, so the
rest of the year will be dominated by fiscal cliff news."    
    Solid growth from the United States and will be crucial to reviving the
world economy and driving demand for commodities in 2013, particularly with a
debt crisis still grinding on in the euro zone.
    China will maintain steady economic polices in 2013, leaving room for
manoeuvre in the face of global risks while deepening reforms to support
long-term growth, the official Xinhua news agency said on Sunday.
 
    China, the world's largest consumer of industrial metals, buys about 40
percent on the global copper supply.
    Investors are now focusing on NY Fed manufacturing data later this session
for clues on the state of the U.S. economy.    
    
    ALUMINIUM TIGHTNESS
    A lack of available aluminium supply towards year-end has propelled its cash
price to a $22 premium against three-month prices, the highest in more than 18
months.
    Three-month aluminium was at $2,121 from a last bid of $2,122 on
Friday.    
    Tightness is being driven by a supply shortage over December-January where
there are still some holders of short positions that cannot find metal to
deliver.
    December aluminium traded at a $40 premium against January on Friday, ahead
of the December prompt, or contract expiry next week. 
    "We are approaching the December prompt and many are now wondering what will
be the final outcome next Tuesday at noon," metals broker Triland said in a
note.
    Although LME aluminium stocks have hit successive record highs
around 5.2 million tonnes over the past month, much of the metal is tied up in
long warehouse queues and is unavailable to market.    
    In other metals, zinc, used to galvanizing was at $2,087 from $2,090
Friday's close while battery material lead was at $2,290.75 from $2,296.
    Tin was at $23,175 from $23,150 and stainless steel ingredient
nickel was at $17,783 from $17,875.
    
 Metal Prices at 1026 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       365.55       -1.65     -0.45     344.75      6.03
  LME Alum      2119.50       -6.50     -0.31    2020.00      4.93
  LME Cu        8051.75      -13.25     -0.16    7600.00      5.94
  LME Lead      2289.00       -7.00     -0.30    2034.00     12.54
  LME Nickel   17772.00     -103.00     -0.58   18650.00     -4.71
  LME Tin      23140.00      -10.00     -0.04   19200.00     20.52
  LME Zinc      2087.00       -3.00     -0.14    1845.00     13.12
  SHFE Alu     15300.00      -15.00     -0.10   15845.00     -3.44
  SHFE Cu*     57970.00      240.00     +0.42   55360.00      4.71
  SHFE Zin     15510.00       60.00     +0.39   14795.00      4.83
 ** 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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