METALS-Copper up on consumer buying, Cyprus bank deal

Fri Mar 22, 2013 1:37pm EDT

* Deal reached to spin off Greek units of Cypriot banks
    * Gains limited by risk of Cyprus banking collapse
    * LME copper stocks hit highest in nearly 10 years

    By Maytaal Angel
    LONDON, March 22 (Reuters) - Copper rose on Friday, helped by bargain
hunting and consumer buying in China, and as concern over the impact of the
potential bankruptcy of Cyprus eased after it agreed with Greece on the takeover
of Greek units of Cypriot banks.
    Copper prices were still heading for the biggest weakly drop in three,
however, as bankruptcy in Cyprus remains a real risk.
    Three-month copper on the London Metal Exchange closed at $7,655 a
tonne from $7,580 at the close on Thursday, reversing losses from the previous
session, when it fell half a percent.
    Copper prices fell 1.1 percent this week, in the biggest decline since late
February. Prices hit a seven-month trough at $7,486.25 a tonne hit on Tuesday,
and are still down around 4 percent on the year.
    "We've seen consumer buying not just in China but also Europe and the U.S.,
but I don't see consumers having need to chase prices really. Inventories are
rising everywhere and mine supply is picking up strongly," said Citi analyst
David Wilson.
    "We're getting close to more fundamentally justified prices for a lot of
metals. You're going to continue to see copper inventory rise this year." 
    Copper price falls this week triggered some restocking by Chinese consumers,
but concerns over euro zone contagion have eclipsed rising demand, both from top
consumer China and in the U.S. housing market.
    "It's fairly apparent people aren't making the orders they need to for a
resumption in demand. The right outlook for copper is neutral to bearish. The
market focuses on what is happening in Europe," said Jonathan Barratt, chief
executive of Barratt's Bulletin, a Sydney-based commodity research firm.
    Data earlier showed German business morale fell in March, breaking a
four-month run of gains, as Cyprus troubles reignited concerns the euro zone
debt crisis could weigh on Europe's largest economy. 
    On the plus-side though, a preliminary survey of factory managers out
Thursday showed solid first-quarter growth in China, while in the U.S., data
showed jobless claims trending lower and factory activity and homes sales both
on the rise. 
    
    COPPER STOCKS SWELL
    Still, LME copper stocks have climbed to their highest in nearly 10 years,
the latest data showed, rising 5,025 tonnes to 562,475 tonnes, which is the
highest since October 2003. 
    LME inventories have more than doubled since the start of December, in part
because Chinese smelters have exported more of their record domestic stockpiles,
helped by a change last year in export rules. 
    China exported 64,781 tonnes of copper in the first two months of this year,
almost a quarter of last year's total. Exports in 2012 grew 75 percent from the
year before. 
    Tin closed at $22,925 a tonne from $22,595, while zinc 
closed at $1,952 from $1,934.
    Lead closed at $2,189 a tonne from $2,172.5, aluminium at
$1,947 from $1,928 and nickel closed at $17,145 from $16,895.
    
 Metal Prices at 1708 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       342.50        0.00     +0.00     365.25     -6.23
  LME Alum      1947.50       19.50     +1.01    2073.00     -6.05
  LME Cu        7659.00       39.00     +0.51    7931.00     -3.43
  LME Lead      2187.25       14.75     +0.68    2330.00     -6.13
  LME Nickel   17122.00      227.00     +1.34   17060.00      0.36
  LME Tin      22801.00      206.00     +0.91   23400.00     -2.56
  LME Zinc      1951.50       17.50     +0.90    2080.00     -6.18
  SHFE Alu     14700.00      -45.00     -0.31   15435.00     -4.76
  SHFE Cu*     55650.00     -380.00     -0.68   57690.00     -3.54
  SHFE Zin     14950.00      -60.00     -0.40   15625.00     -4.32
 ** 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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