September 17, 2013 / 10:41 AM / 4 years ago

METALS-Copper flat as investors await Fed decision on stimulus

4 Min Read

* Chinese copper smelters look for steep hike in TC/RCs
    * Lead hits 7-week low as inventories rise
    * LME lead stocks rise by another 14,875 tonnes


    By Silvia Antonioli
    LONDON, Sept 17 (Reuters) - Copper steadied above a
five-week low on Tuesday in cautious trade ahead of a Federal
Reserve policy meeting at which the U.S. central bank is widely
expected to announce it will begin rolling back its monetary
stimulus.
    Benchmark copper on the London Metal Exchange (LME) 
closed down 0.1 percent at $7,075 a tonne. It fell to $7,024 a
tonne on Friday, its lowest since Aug. 8.
    Volumes were thin, with copper turnover of 11,790 lots
compared to an average of 18,830 lots over the past two months. 
     
    Investors were awaiting the two-day meeting starting on
Tuesday during which the Federal Reserve will discuss whether to
taper its stimulus programme which has benefited metals and
other assets perceived as riskier.
    Despite a lacklustre August U.S. jobs report, the Fed's Open
Market Committee is expected to trim its monthly asset purchases
by about $10 billion from $85 billion. 
    "The dominant factor is the Fed today; not many people want
to commit before the Fed meeting and also because physical
demand is not there just yet," said analyst Andrey Kryuchenkov
at VTB Capital in London.    
    "When you look at the premiums, when you look at physical
demand in Europe or even in China, there is nothing to be
extremely excited about. So many investors chose to stay away at
least until it is clear what the Fed does tomorrow."
    
    GROWING SUPPLY
    Expectations of higher supplies are also dragging on copper,
which has fallen by about 11 percent so far this year.
    Stronger mine output of concentrates is encouraging Chinese
copper smelters to look for up to a 50 percent increase in
annual term treatment and refining charges (TC/RCs) for
2014. 
    "I would say that the copper market is well balanced until
the year-end and there are significant projects that should keep
the market well supplied in the future," Kryuchenkov said.
    In other metals, benchmark lead hit its lowest in
seven weeks at $2,037.75 a tonne, pressured by rising stocks,
before paring losses to close at $2,042, down 0.5 percent. 
    Stocks of the metal in LME-registered
warehouses have risen by 36 percent from a 3-1/2 year low hit a
week ago.     
    Inventories shot up by 49,475 tonnes at LME warehouses in
the Dutch port of Vlissingen in one day last week. It was the
biggest daily rise in lead stocks since 1970, LME data showed.
    Data on Tuesday showed a further increase of 14,875 tonnes
which brought stocks of the metal, used to make batteries, to
246,100 tonnes, their highest since early May.  
    "Most of the delivery was to the LME's warehouse in
Vlissingen, so we believe that this 'isolated' increase is not
so much a reflection of the interplay of physical supply and
demand," Commerzbank analysts said in a note.
    "Instead, the material could serve to cover a short position
or could be due to a dominant market position, which requires
the holder to lend back to the market." 
    Zinc finished 0.3 percent weaker at $1,860.50 a
tonne.
    "Although we retain some caution, not least due to large
stocks and possible slowing demand growth momentum in Q4 2013,
our latest assessment is less downbeat for zinc prices ahead,"
said analysts led by Ric Deverell at Credit Suisse.
    "Support around $1,800 may have a strengthening fundamental,
as well as technical, basis."
    Aluminium ended 0.3 percent down at $1,777 a tonne,
nickel shed 0.3 percent to end the day at $13,830, but
tin bucked the trend and gained 0.3 percent to $22,945.
    
    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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