METALS-Copper gains on dollar, shortage after Philippines typhoon

Thu Nov 21, 2013 12:10pm EST

* China copper importers face shortfall after typhoon-traders

* China imports 292,620 tonnes of refined copper in Oct

* PMIs in China, euro zone fall

By Eric Onstad

LONDON, Nov 21 (Reuters) - Copper rose at the close on Thursday as a softer dollar and a short-term shortage of refined metal offset worries about a fall in Chinese factory activity and U.S. central bank tapering.

Three-month copper on the London Metal Exchange ended at $7,020 a tonne from $6,996 at the close on Wednesday. It steadied after earlier sinking towards three-month lows, reaching an intra-session trough of $6,950 a tonne.

Copper, which has shed 12 percent this year, hit a low of$6,910 a tonne on Tuesday, the weakest since Aug. 7.

Spot premiums for copper in China have hovered near four-year highs following the closure of a Philippine smelter hit by one of the world's biggest typhoons.

Traders said Chinese importers of refined copper faced a shortfall of about 30,000 tonnes this month and the next due to the situation in the Philippines.

While pockets of shortages are propping up the copper price currently, it is still due to come under pressure as new and improved mines churn out more supply, said Stephen Briggs, metals strategist at BNP Paribas in London.

"There are a couple of things that are supportive in the near term. Visible stocks have fallen a lot in the last four or five months and the market is technically tight," he said.

"There are more losses ahead for copper but the next leg down might not be for several weeks."

The dollar fell against a basket of currencies, helping to support copper. A weaker U.S. currency makes dollar-priced commodities less expensive for foreign investors.

Copper inventories on the LME , which have declined by nearly 30 percent since early September, fell by another 3,575 tonnes on Thursday.

Reflecting a lack of immediately available copper, the discount for cash copper narrowed against benchmark three-month prices to $6.15 from $14.25 on Monday.

On the macro front, markets were dampened after minutes were released on Wednesday from a U.S. Federal Reserve meeting, showing the central bank could start to scale back its commodities-friendly monetary stimulus in the next few months if the economy continued to recover.

"It's very Fed-driven at the moment," said Mark Keenan, head of commodities research for Asia at Societe Generale.

Adding to the jitters on Thursday were downbeat PMI surveys from the biggest metals consumer China and the euro zone.

Activity in China's vast factory sector grew at a milder pace in November as new export orders shrank, bolstering expectations the economy could lose some of its vigour in the fourth quarter.

In the euro zone, a fragile recovery in the private sector weakened unexpectedly this month despite resurgent growth in Germany, as French business activity tumbled.

Three-month tin closed at $22,945 a tonne from $22,800 at the close on Wednesday. Analysts expect a deficit of the metal on worries about an expected ban on exports from top producer Indonesia.

Three-month nickel fell to its lowest since July, and closed at $13,430 from $13,530. It has fallen more than 20 percent so far this year, and is on track for a third annual loss, under pressure from a widening surplus of the metal.

The market surplus ballooned to 127,100 tonne in the first nine months of the year, more than double the surplus in the same period last year, a monthly bulletin from the International Nickel Study Group showed.

Aluminium closed at $1,783 a tonne from $1,781, lead at $2,088 from $2,898 and zinc at $1,889 from $1,891.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

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