METALS-Copper steady as Iran deal offsets strong dollar, surplus

Mon Nov 25, 2013 12:26pm EST

* Iran nuclear deal seen positive for economic growth
    * Data shows global copper market swung to surplus in Aug.
    * Expectations Fed could soon start tapering stimulus

    By Maytaal Angel
    LONDON, Nov 25 (Reuters) - Copper closed little changed on
Monday as a deal over Iran's nuclear programme that could boost
global growth offset a strong dollar and concerns over rising
supplies. 
    The deal to curb Iran's nuclear programme prompted oil
prices to fall and world equity markets and the dollar to rise
as investors priced in easing Middle East political tensions and
the lift it could give to global economic growth. 
    A stronger dollar makes dollar-priced metals costlier for
non-U.S. investors, typically putting pressure on prices. 
    Benchmark three-month copper on the London Metal Exchange
 closed at $7,099 a tonne on Monday, after hitting its
highest level in nearly two weeks at $7,140 a tonne. It closed
at $7,095 on Friday.
    Copper prices were also undermined by concerns over rising
supplies. Data from the International Copper Study Group have
shown that the global copper market swung to a 21,000-tonne
surplus in August, rising after three straight months of
deficit..
    "We think the copper market has a problem with supplies
continuing to increase despite the lower prices and the
lacklustre demand outlook. We expect prices to end the year at
$6,750 a tonne," said Tom Pugh, an analyst at Capital Economics.
    Copper has been underpinned somewhat in recent weeks by a
short-term fall in physical supply in Asia and expectations
China's economic reforms will support an improvement in global
demand next year. However, the metal is still down about 10
percent for the year.
    China's importers of refined copper face a shortfall of
about 30,000 tonnes this month and the next as a typhoon-hit
Philippines smelter delays metal deliveries, supporting spot
premiums near four-year highs. 
    In the United States, there are still expectations that the
Federal Reserve could soon start scaling back its
commodity-friendly stimulus programme as the U.S. economy
improves. 
    Solid U.S. data last week pointed to a gradually improving
outlook for 2014, albeit with less money-printing. But on
Monday, data showed contracts to buy previously owned U.S. homes
fell for a fifth straight month in October, adding to signs of
cooling in the housing market. 
    Trading is expected to calm down this week ahead of the U.S.
Thanksgiving holiday on Thursday.
    In other metals, aluminium closed at $1,774.50 a
tonne from $1,782 at the close on Friday. Last week it hit its
lowest level since July. 
    The metal is in chronic oversupply, but analysts polled by
Reuters last month expect the surplus to shrink to 592,000
tonnes next year from 853,000 tonnes this year, with some
expecting a deficit in the coming two years. 
    Zinc closed at $1,903 a tonne from $1,909 on Friday;
lead at $2,087.50 a tonne from $2,107; tin at
$22,945 a tonne from $22,850; and nickel at $13,545 a
tonne from $13,560.
    
    PRICES
    Three month LME copper          CMCU3 
    Most active ShFE copper         SCFcv1 
    Three month LME aluminium       CMAL3 
    Most active ShFE aluminium      SAFcv1 
    Three month LME zinc            CMZN3 
    Most active ShFE zinc           SZNcv1 
    Three month LME lead            CMPB3 
    Most active ShFE lead           SPBcv1 
    Three month LME nickel          CMNI3 
    Three month LME tin             CMSN3
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