METALS-Copper rebounds on strong euro, Chile strike supports

Mon Apr 8, 2013 12:22pm EDT

* Top global copper conference CESCO begins in Chile
    * Key Chile union to stage nationwide strike

    By Harpreet Bhal and Silvia Antonioli
    LONDON, April 8 (Reuters) - Copper rose on Monday, rebounding from
falls the previous week, as the euro gained ground against the dollar
and a strike in Chile raised concerns over temporary supply
constraints.
    Gains however, were capped by fears of a weaker metal demand
outlook, highlighted by below-expectation economic data late last week
from the United States.
    Three-month copper on the London Metal Exchange closed at
$7,450 a tonne, up 0.6 percent from a close of $7,406 on Friday. It hit
an 8-month low of $7,331.25 last week and it is down about 9 percent
from the beginning of the year.
    Helping gains was a rise in the euro against the dollar, which
makes commodities priced in the U.S. unit cheaper for holders of other
currencies. 
    News that a Chilean union has planned a nationwide strike for
Tuesday which could constrain supply, at least temporarily, also lent
some support to copper prices. 
    Top copper miner Chile provides almost a third of the world's
supply for the red metal.
    "The market saw a correction today as a stronger euro/dollar
exchange rate spurred some short covering," T-Commodity consultant
Gianclaudio Torlizzi said.
     "As the metal has been oversold recently, I expect in the next few
weeks it could go up to its 200-day moving average ($7,845 at 1547
GMT), also because of improving fundamentals. The news of the announced
strike in Chile for example will put upwards pressure on copper
premiums."
    Premiums are sums that consumers pay on top of London Metal
Exchange cash prices to get delivery of physical metal.
    Chile's copper production has been in the last few years badly
affected by frequent strikes at mines which have boosted the metal
price. 
    But demand for the metal, used in power and construction, has been
weaker in the last few months while production has grown and the market
balance has switched from a deficit into a surplus, according to many.
    "Many commentators (expect) a lengthy period of surplus for copper,
something we have been warning of for fully a year now. CESCO Week may
play a leading role in setting the tone for Q2 13," BNP Paribas said in
a note to clients. 
    The world's biggest copper conference, CESCO, gets under way in
Santiago, Chile, this week.
    Chile state miner Codelco also said it expects a moderate global
oversupply of the metal this year. 
    Global miner Anglo American in the meantime expects to
produce 3 percent more copper this year than last in part as the
promising but troubled Collahuasi mine turns the corner after a tough
2012. 
    
          
    
    BULLISH BETS CUT  
    Also keeping investors cautious was data last week showing U.S.
employers hired at the weakest pace in nine months in March, a sign a
recovery in the world's largest economy might be losing momentum. 
  
    This could affect demand for industrial metals.
    "The demand outlook is looking shaky at best for most of the world.
The Chinese growth picture is unlikely to be as strong as many have
anticipated and inventory levels are high," said Ross Strachan,
economist at Capital Economics. 
    LME copper stocks and ShFE inventories are sitting around their
highest levels in a decade, while stocks in Shanghai's bonded zone are
close to record levels.  
    Hedge funds and other big speculators have cut their bullish bets
on commodities by the most since February, trade data showed on Friday,
amid signs of a stagnating U.S. economic recovery and uncertainty over
raw materials demand. 
    In copper in particular, speculators increased their net short by
8,915 contracts to 38,951 contracts in the week to April 2, the latest
data showed. That is the shortest the market has been since at least
the start of 2006. 
 
    Aluminium closed at $1,890 a tonne, from a last bid of
$1,886.50 on Friday while zinc, untraded in rings, was last bid
at $1,892 from a last bid of $1,883. 
    Tin ended at $22,925 from Friday's close of $22,895, nickel
 at $16,050 from $15,950 and lead at $2,058 from $2,045.
    
 Metal Prices at 1620 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       336.80        2.40     +0.72     365.25     -7.79
  LME Alum      1891.50        6.50     +0.34    2073.00     -8.76
  LME Cu        7464.00       58.00     +0.78    7931.00     -5.89
  LME Lead      2057.50       12.50     +0.61    2330.00    -11.70
  LME Nickel   16053.00      103.00     +0.65   17060.00     -5.90
  LME Tin      22840.00      -55.00     -0.24   23400.00     -2.39
  LME Zinc      1893.50       36.50     +1.97    2080.00     -8.97
  SHFE Alu     14650.00       95.00     +0.65   15435.00     -5.09
  SHFE Cu*     54650.00      250.00     +0.46   57690.00     -5.27
  SHFE Zin     14680.00      120.00     +0.82   15625.00     -6.05
 ** 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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