METALS-London copper comes off 9-day high as short-covering fizzles

Thu Dec 5, 2013 3:04am EST

* ShFE plans to launch nickel, tin contracts next year
-official
    * Copper prices seen easing in quiet market -Triland
    * Coming Up: ECB interest rate decision at 1245 GMT


    By Melanie Burton
    SINGAPORE, Dec 5 (Reuters) - London copper slipped on
Thursday from a nine-day high hit in the previous session, as a
short-covering rally triggered by surprisingly robust U.S. jobs
data ran out of steam. 
    Copper prices are recovering from three-month lows touched
in November, but rallies have typically fizzled due to worries
that a rising tide of supply will dent prices next year.
    "The major reason for copper's rebound is probably due to
the dollar weakening last night and a technical rally," said
Helen Lau, an analyst at UOB-Kay Hian Securities in Hong Kong.
    Lau said economic events would remain the dominant driver of
copper prices for now, with prospects for further weakness in
the short term. 
    "The U.S. jobs data may continue to improve so that provides
a strong case for the Fed to consider tapering. If that is the
case, the dollar will strengthen and copper will come down
again," said Lau.
    A strong jobs report could be a Catch-22 for copper. While
economic recovery bodes well for industrial copper demand, it
could bolster chances for the Federal Reserve to curb its
stimulus measures soon, reducing support for liquidity- friendly
commodities. 
    Three-month copper on the London Metal Exchange had
slipped 0.21 percent to $7,080.25 a tonne by 0743 GMT, paring
gains of nearly 2 percent from the previous session.    
    Copper prices rallied to $7,128 a tonne on Wednesday, their
highest since Nov. 25, making a fitful recovery from three-month
lows touched on Nov. 19 at $6,910 a tonne.
    The most-traded February copper contract on the Shanghai
Futures Exchange jumped 0.79 percent to close at 50,720
yuan ($8,300) a tonne.
    U.S. private-sector hiring rose in November at the fastest
clip in a year, opening the door wider for the Fed to start
trimming its bond purchases within the next few months.
    "Copper moved up initially after option expiry and then
short-covering continued - the market was short and got spooked
by the better ADP employment number," a Singapore based trader
said. 
    Also strengthening the potential for headwinds from a
stronger dollar, analysts said the euro could come under selling
pressure, given that the European Central Bank is likely to stay
very dovish in a meeting on Thursday. 
    Traders are reluctant to take positions ahead of a key U.S.
labour report for November due on Friday.
    "In a quiet market like this, it looks like it (copper) will
drift lower again," broker Triland Metals said in a note.
    Elsewhere, growing international acceptance of China's
renminbi currency is set to draw in liquidity for new
commodities contracts, the chief executive of the Hong Kong
Exchanges and Clearing Ltd (HKEx) told Reuters.
 
    The Shanghai Futures Exchange aims to launch nickel and tin
futures contracts to broaden the range of non-ferrous metals
covered, an exchange official said on Thursday. 
    
  Base metals prices at 0743 GMT                                                   
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7080.25    -14.75     -0.21    -10.70
  SHFE CU FUT FEB4    50720       400     +0.79    -12.07
  HG COPPER MAR4     3.23     -0.02     -0.55    -99.12
  LME Alum          1770.00     -2.00     -0.11    -14.53
  SHFE AL FUT FEB4    14050        55     +0.39     -8.44
  LME Zinc          1895.25      0.25     +0.01     -8.15
  SHFE ZN FUT FEB4    14805      -740     -4.76     -4.76
  LME Nickel       13655.00      5.00     +0.04    -20.40
  LME Lead          2085.50      0.50     +0.02    -10.88
  SHFE PB FUT      13905.00     20.00     +0.14     -8.82
  LME Tin          22800.00     75.00     +0.33     -2.56
  LME/Shanghai arb^    -260                                                        
                                                                                   
   Shanghai and COMEX contracts show most active months
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
 
    
   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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