METALS-Copper slips on Europe, growth prospects support

Mon Feb 11, 2013 12:37pm EST

* Euro rises vs dollar, susceptible to political concerns
    * Shanghai markets closed this week for Lunar New Year
    * China preparing to restock supply chain post holiday -Macquarie

    By Maytaal Angel
    LONDON, Feb 11, (Reuters) - Copper fell on Monday, hurt by the Lunar New
Year holiday in Asia and renewed political concerns in Europe, though the slide
was kept in check by improved U.S. and Chinese growth prospects.
    Three-month copper on the London Metal Exchange, untraded at the
close, was bid at $8,199 a tonne from $8,295 a tonne at the close on Friday,
with volumes low as a result of the Lunar New Year which shut most Asian
markets. 
    After spending much of January close to flat, copper last week rose more
than 3 percent and hit its highest since Sept. 20 at $8,346 a tonne. 
    Three-month zinc, which hit its highest in one year on Friday at
$2,218 a tonne, was hovering within sight of those peaks from September 2011,
and trading in greater volume than copper.
    Helping metals, the dollar was softer against a basket of currencies as the
euro rose versus the U.S. currency after a European Central Bank policymaker
dismissed talk of intervening to weaken the euro. 
    But the euro remains susceptible to political and fiscal uncertainty in the
euro zone. A weaker dollar makes metals less expensive for holders of other
currencies. 
    Also limiting metals' falls, trade data late last week showed China's
exports jumped a better-than-forecast 25 percent in January from a year earlier,
while imports surged 28.8 percent, also ahead of analysts' estimates.
    U.S. trade data was also positive, showing the deficit shrank in December to
its narrowest in nearly three years, and suggesting the economy did much better
in the fourth quarter than initially estimated.   
    "Macro trends are pretty constructive, it would be strange (then) to have no
conversion into underlying demand for metals - yes it's missing at the moment
but we're hopeful, the signs are encouraging," said Societe Generale analyst
Robin Bhar.
    
    HOPES PINNED ON CHINA
    Despite still ample supply in copper, as evidenced by the wide discount for
cash copper over the three-month price , investors remain hopeful the
Chinese will restock after the Lunar New Year.
    China, which accounts for around 40 percent of refined copper demand,
imported 350,958 tonnes of copper in January, up almost 3 percent from December
as importers brought forward shipments to avoid delays during the week-long new
year holiday.
    "Before Chinese new year, we saw a small draw down in copper stocks from
Shanghai which means Chinese consumers will probably come back for a bit more
after the New Year. The only potential downside is any strength in the dollar,"
said Jonathan Barratt, chief executive of Sydney-based commodity research firm
Barratt's Bulletin.
    Shanghai copper stocks have dropped for the past three weeks to 196,699
tonnes, down around 15,000 tonnes from nine-month peaks seen at the start of the
year. 
    According to a Macquarie China copper survey, sentiment in the copper
industry is strongest since at least June 2012, suggesting orders could improve
strongly after the Chinese New Year.
    "Inventory data suggests a rebalancing of the value chain looks imminent;
stocks at smelters are critically low, while fabricators are planning to
increase purchases. This is likely to drive prices higher and lead to a fall in
bonded warehouse inventory," said Macquarie.                                   
    In other metals, zinc closed at $2,192 from $2,205. The metal used
to galvanise steel has powered ahead due to chart-based buying, rather than
fundamentals, traders said.
    Benchmark tin, untraded at the close, was bid at $24,850 a tonne,
unchanged from the close on Friday.
    Lead closed at $2,388 a tonne from $2,422, aluminium at
$2,103 from $2,119, and nickel at $18,175 a tonne from $18,315.
    
 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 2012   Ytd Pct
                                                              move
  COMEX Cu       372.10       -3.85     -1.02     365.25      1.88
  LME Alum      2103.25       -7.75     -0.37    2073.00      1.46
  LME Cu        8193.50     -101.50     -1.22    7931.00      3.31
  LME Lead      2390.00      -32.00     -1.32    2330.00      2.58
  LME Nickel   18166.00     -149.00     -0.81   17060.00      6.48
  LME Tin      24850.00        0.00     +0.00   23400.00      6.20
  LME Zinc      2191.00      -14.00     -0.63    2080.00      5.34
  SHFE Alu     15140.00       50.00     +0.33   15435.00     -1.91
  SHFE Cu*     59480.00      120.00     +0.20   57690.00      3.10
  SHFE Zin     15780.00       20.00     +0.13   15625.00      0.99
 ** 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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