* Spain in focus as bailout expectations rise
* Pan Pacific offers $85/T 2013 copper premium to China
* ECB rates unchanged
By Harpreet Bhal and Silvia Antonioli
LONDON, Oct 4 Copper edged higher on Thursday,
helped by a stronger euro on expectations Spain would seek a
bailout to rescue its economy, although gains were capped by
uncertainty about global growth, while trading volumes were low
as China remained on holiday.
Benchmark copper on the London Metal Exchange (LME)
rose 0.2 percent to finish at $8,305, from Wednesday's close of
In the last few weeks central banks in the United States,
European Union and Japan have moved to loosen their monetary
policy, in an attempt to stimulate economic growth.
This boosted prices of commodities deemed riskier, including
"A lot of the actions from central banks recently have
clearly helped to minimise any downside risks and they have
tended to also weaken the dollar," Standard Chartered analyst
Daniel Smith said.
"Copper is slightly underperforming (other metals) as the
fundamentals are not that good at the moment with demand
especially in Europe still pretty terrible. In the medium term
though we think fundamentals will turn around."
The euro rose against the dollar, with investors keeping a
close eye on possible financial aid for Spain as the European
Central Bank (ECB) left interest rates unchanged at its latest
"Investors are still waiting for Spain to bite the bullet
and request a formal rescue. It is a not a question of if but
when for Spain (to ask for a bailout) and that will be seen as a
huge relief for the market," said Robin Bhar, analyst at Societe
"But the potential upside for copper is pretty limited whist
there is uncertainty about China's growth and U.S. growth and
with the euro zone in recession, and that is going to keep a lid
Trading volumes were thin as China is still on a public
holiday. China is the world's top consumer for refined copper,
accounting for as much as 40 percent of demand.
Investors are likely to look ahead to non farm payrolls data
from the United States, due on Friday, for indications of a
recovery in the country's labour market.
Sentiment surrounding the U.S. labour market was boosted in
the previous session after data showed private sector hiring
rose by a better-than-expected number in September.
Activity in the vast services sector also picked up,
suggesting the economy remained on track for modest growth.
"We think the slant of the market after the payroll numbers
on Friday will really be the action one should pay attention to.
For now look at continued back and forth as the market
consolidates terrific gains made since August," RBC Capital said
in a note.
A report on Thursday showed that the number of Americans
filing new claims for unemployment benefits rose only slightly
last week after a big drop the week before, keeping in place a
trend that suggested a mild improvement in the labour market.
In industry news, Japan's biggest copper smelter, Pan
Pacific Copper, is in talks with buyers in China to
slash its term premium for 2013 shipments by 15 percent from
this year to $85 a tonne, a source familiar with the matter
The lower premiums reflect slowing demand growth in the
world's top consumer of metals.
Uncertainty about the outlook for physical demand continues
to sour sentiment for the metal used in power and construction
as global economic growth struggles.
"Overall we expect Q4 prices to continue to take cues from
the macro rather than the physical market," said James Luke, a
Hong Kong-based commodities analyst at China International
Capital Corporation (CICC).
"Prices will be well supported but I don't expect physical
demand to surprise on the upside and that should limit prices
relative to other more purely investor-driven metals such as
In other metals, battery material lead closed at
$2,290.50 a tonne, from Wednesday's close of $2,306, while zinc
ended at $2,065 from $2,082 at the close on Wednesday.
Nickel closed at $18,675 from $18,525.
Aluminium finished at $2,212 per tonne, from a last
bid of $2,102.50 on Wednesday, and tin at $22,500, its
highest since early May, from a last bid of $22,100.
Metal Prices at 1611 GMT
Metal Last Change Pct Move End 2009 Ytd Pct
LME Alum 2110.00 3.00 +0.14 2230.00 -5.38
LME Cu 8299.00 9.00 +0.11 7375.00 12.53
LME Lead 2289.50 -16.50 -0.72 2432.00 -5.86
LME Nickel 18670.00 145.00 +0.78 18525.00 0.78
LME Tin 22500.00 205.00 +0.92 16950.00 32.74
LME Zinc 2064.00 -18.00 -0.86 2560.00 -19.38
SHFE Alu 15760.00 65.00 +0.41 17160.00 -8.16
SHFE Cu* 59770.00 670.00 +1.13 59900.00 -0.22
SHFE Zin 15680.00 100.00 +0.64 21195.00 -26.02
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07