METALS-Copper recovers from Italy vote on Bernanke, U.S data

Tue Feb 26, 2013 12:34pm EST

* Bernanke defends ultra-loose monetary policy
    * U.S. housing, confidence data better than expected
    * Italy election stalemate raises debt crisis fears

    By Harpreet Bhal and Maytaal Angel
    LONDON, Feb 26 (Reuters) - Copper edged up on Tuesday as
upbeat U.S. housing and consumer confidence data offset worries
about a deadlocked Italian vote, and as investors were relieved
to hear the Federal Reserve defend its ultra-loose monetary
policy.
    Benchmark three-month copper on the London Metal Exchange
(LME) ended up 0.30 percent at $7,858.50 a tonne,
bringing losses for the year to just under 1 percent. The metal
earlier hit a two-month low of $7,785 a tonne. 
    Federal Reserve Chairman Ben Bernanke's congressional
testimony earlier strongly defended the U.S. central bank's
bond-buying stimulus, and also urged lawmakers to avoid sharp
spending cuts set for Friday. 
    Meanwhile, U.S. data showed new home sales jumped to 4-1/2
year highs in January while home prices in December rose a more
than expected 0.9 percent in December. Data also showed consumer
confidence rebounded strongly in February. 
   
    Limiting gains in copper, however, was concern about an
escalation of the euro zone's debt crisis following the
deadlocked Italian election result, as well as weak demand from
China, which consumes some 40 percent of the world's copper.
 
    "The outcome of the Italian election comes at a time when
the market was already selling off as investors have been taking
profit from the January rally," said Andrey Kryuchenkov, analyst
at VTB Capital. 
    "Open interest for copper is shrinking as people close out
long positions, with little indication of buying activity coming
out of China at the moment." 
    Demand from China has remained subdued following the Lunar
New year holiday, disappointing investors who had banked on
quick buying from the world's top copper consumer on its return
to the market. 
    Added to this, Italy, Europe's third-largest economy, faces
a dangerous vacuum after elections in which no group won, while
the U.S. economy might face serious headwinds if the authorities
there fail to agree a budget before this Friday's deadline.
    "Between the uncertainties coming out of Italy and the lack
of progress on the U.S. budget talks, we suspect investors will
likely move to the sidelines, removing the buying power that has
been powering most markets higher over much of February," said
INTL FC Stone analyst Ed Meir in a note.
          
    
    TREATMENT CHARGES 
    In industry news, zinc miners and smelters are negotiating
this week in Mexico over the year's processing fees to turn zinc
concentrate into refined metal.
    The annual benchmark for zinc treatment charges, which is
generally settled around this time, was at $191 per tonne last
year, with smelters expected to win higher fees.
    "Treatment charges $30 higher than last year would not be
disappointing. The market is smaller and less liquid, also
because all the Chinese concentrate is staying in China. This
should lead to bigger swings going forward," said an official at
Swedish miner Boliden AB. 
    Benchmark zinc ended up 0.43 percent at $2,098 a
tonne, while aluminium closed down 0.71 percent at
$2,017 a tonne, having earlier hit its lowest since late
November at $2,010 a tonne.
    Three-month tin ended up 0.71 percent at $23,300 a
tonne, nickel closed down 0.36 percent at $16,645 a
tonne, having earlier hit its lowest since late November at
$16,465 a tonne; and lead ended up 0.17 percent to
$2,297 a tonne.
 Metal Prices at 1709 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
  COMEX Cu       355.15        0.85     +0.24     334.65      6.13
  LME Alum      2023.00      -14.00     -0.69    2230.00     -9.28
  LME Cu        7858.50       23.50     +0.30    7375.00      6.56
  LME Lead      2297.00        4.00     +0.17    2432.00     -5.55
  LME Nickel   16645.00      -60.00     -0.36   18525.00    -10.15
  LME Tin      23295.00      160.00     +0.69   16950.00     37.43
  LME Zinc      2098.50        9.50     +0.45    2560.00    -18.03
  SHFE Alu     14810.00      -45.00     -0.30   17160.00    -13.69
  SHFE Cu*     57110.00     -140.00     -0.24   59900.00     -4.66
  SHFE Zin     15540.00      -10.00     -0.06   21195.00    -26.68
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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