METALS-Copper down slightly on U.S. fiscal cliff uncertainty

Mon Dec 17, 2012 8:39am 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 and Stephen Eisenhammer
    LONDON, Dec 17 (Reuters) - Copper edged lower on Monday
weighed by uncertainty over the ability of the United States to
avert a "fiscal cliff" of tax increases and spending cuts, which
could slow growth and hit global metals demand.    
    Benchmark copper on the London Metals Exchange traded up 0.4
percent at $8,065 in official rings, from $8,065 at Friday's
close.
    In the first real movement in budget deficit negotiations to
avoid the fiscal, U.S. House of Representatives Speaker, John
Boehner, offered to accept a tax rate increase for Americans
earning over $1 million. 
    "The market is still consolidating in a very narrow range
because people are waiting for fundamental 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.
    The metals market, however, found some support in Friday's
data pointing to growth in both China's vast manufacturing
sector and U.S. factories activity but this still has to
translate in an improvement in metals fundamentals.
 
    "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," Kryuchenkov said.    
    Solid growth from the United States 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.
    Meanwhile the world's second largest economy, China, will
maintain steady economic polices in 2013, enabling it to
manoeuvre in the face of global risks while deepening reforms to
support long-term growth, the official Xinhua news agency said
on Sunday. 
    China, which is the world's largest consumer of industrial
metals, buys about 40 percent of global copper supply.
    Investors are now focusing on NY Fed manufacturing data
later this session for further 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 the market.    
    In other metals, zinc, used to galvanize steel, did
not trade in official rings but was bid at $2,079, down 0.5
percent, from $2,090 at Friday's close, while battery material
lead was down 0.4 percent at $2,286 from $2,296.
    Tin was up 1 percent at $23,375, from $23,150, and
stainless steel ingredient nickel was 1.3 percent lower
at $17,650, from $17,875.

 Metal Prices at 1306 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       364.95       -2.25     -0.61     344.75      5.86
  LME Alum      2110.00      -16.00     -0.75    2020.00      4.46
  LME Cu        8036.25      -28.75     -0.36    7600.00      5.74
  LME Lead      2285.25      -10.75     -0.47    2034.00     12.35
  LME Nickel   17701.00     -174.00     -0.97   18650.00     -5.09
  LME Tin      23250.00      100.00     +0.43   19200.00     21.09
  LME Zinc      2077.50      -12.50     -0.60    1845.00     12.60
  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