* 2-day Fed meeting on policy decision starts on Tuesday
* BHP halts some operations at West Australia nickel mine
By Silvia Antonioli and Julia Fioretti
LONDON, Dec 17 Copper was steady near a 2-month
peak on Tuesday as economic data from the United States
brightened the outlook for metals demand but also raised the
chances the Federal Reserve will curb its commodity-friendly
stimulus programme soon.
Benchmark copper on the London Metal Exchange (LME)
closed at $7,275 a tonne, down slightly from a close at $7,290
on Monday, when it hit a two-month high.
A pickup in global factory activity and a near-term shortage
of refined metal has helped copper recover five percent from a
three-month low of $6,910 a tonne struck last month.
"Yesterday the whole metals complex benefited from better
than expected industrial output in the United States and now
it's a bit of a catch-22 situation because better U.S. data
means that there's more pressure on the Fed (to taper)," said
VTB analyst Andrey Kryuchenkov.
"Any sort of hint or inclination (towards hawkishness) would
be quite dollar bullish and could still limit the upside and
limit this recent rally for copper."
A strong U.S. currency makes dollar-priced assets such as
metals costlier for holders of other units.
Upbeat economic data including strong industrial output from
the United States and solid manufacturing numbers in Europe
boosted optimism about the state of the global
The economic strength also suggested the Fed could begin
winding in its stimulus programme sooner than previously
expected. The programme has expanded liquidity, boosted
investment and helped prices of assets such as metals.
Although a majority of economists polled by Reuters expected
the taper to happen in March, the recent run of upbeat economic
data has steadily shortened the odds on an announcement at this
week's two-day meeting concluding on Wednesday - or in January.
"We suspect that directional money has started to gravitate
to the sidelines ahead of the Fed policy statement and that
conditions will remain quiet," said Ed Meir, an analyst at INTL
TIGHT NEAR-TERM SUPPLY
Low availability of physical material for nearby delivery
has also supported copper in the last few days, pushing its
forward curve into a steeper backwardation - the premium paid
for cash over three-month copper.
On Tuesday, the cash-to-three month spread was at $22 a
tonne, not far off a 19-month high of $30 hit on Monday.
Underlining supply tightness, copper stocks in LME-monitored
warehouses fell 2,625 tonnes to total 386,550 tonnes - their
lowest since early February, exchange data showed.
Yet, more copper supply is expected to come on stream next
"The whole market knows that it will be in a small surplus
next year, that supplies are actually growing ... so that will
limit the upside in any case," Kryuchenkov said.
BHP Billiton said on Tuesday it would stop
operations in the sub-level cave at its Perseverance mine due to
safety concerns after a small earthquake at the Western
Australian nickel mine in October.
The global nickel market surplus more than doubled to
147,600 tonnes in the first 10 months of 2013, the International
Nickel Study Group said this month.
Nickel ended at $14,060 a tonne from $14,030 while
aluminium exchanged hands at $1,797 a tonne from
Zinc closed at $1,999.50 a tonne from $1,992 and
lead ended at $2,173 from $2,166.
Tin closed at $22,775 from $22,800.
Tin traders are offering term pacts for the first quarter of
2014, after new rules by top exporter Indonesia made it
impossible for buyers and sellers to strike their usual deals.
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