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METALS-Copper ends down as investors await central bank action
August 27, 2012 / 4:51 AM / 5 years ago

METALS-Copper ends down as investors await central bank action

* China must be ready to nip near-term risks - state media
    * Fed has room to deliver stimulus - Bernanke
    * Jinchuan buys Chinese spot copper - sources
    * Coming up: U.S. consumer confidence for August Tuesday

 (Recasts, updates with New York closing copper price)
    By Chris Kelly and Carrie Ho
    NEW YORK/SHANGHAI, Aug 27 (Reuters) - New York copper futures ended lower in
holiday-thin business on Monday, pausing from last week's near 2-percent climb
as investors sought more clarity about central bankers' efforts to help
stimulate global growth and metals demand.
    Copper's pause reflected a more cautious stance this week from the broader
market, with the focus squarely set on a meeting of central bankers at Jackson
Hole, Wyoming, on Friday for clarity on what the Federal Reserve will do to
further stimulate the economy.
    Investors are also trying to assess how the European Central Bank (ECB) will
tackle the bloc's credit crisis and what China intends to do to keep its rate of
growth above the government's 7.5 percent goal.
    "In the short term, everybody is awaiting Bernanke's speech Friday in
Jackson Hole to see what the Fed intends to do ... maybe we'll see some type of
coordinated central bank action, but there's a lot things up in the air," said
Matthew Zeman, head of trading with Kingsview Financial in Chicago.
    "The markets right now are looking for some more clarity on what the plan is
before they decide which way they want to go."
    COMEX copper for September delivery ended down 0.70 cent at $3.4765
per lb after failing to sustain early gains through the 100-day moving average
above $3.49. The session range was $3.4630 to $3.5060.
    With the London Metal Exchange (LME) closed for a bank holiday in the UK,
COMEX volumes pushed above 51,500 lots in late New York trade -- more than 15
percent above the 30-day average, according to preliminary Thomson Reuters data.
    The New York session failed to build on overnight gains in Asia where the
prospect of more Chinese stimulus action helped lift the most-active December
copper contract on the Shanghai Futures Exchange by 0.4 percent to
55,840 yuan ($8,800) per tonne.
    China should ready plans to respond to near-term risks in an economy facing
significant downward pressure but keep the broad policy focus on longer-term
structural adjustments, the official People's Daily said in a front page
editorial on Friday, suggesting that Beijing has not ruled out more imminent
stimulus policies.  
    Reflecting the prospects of central bank action, data on Friday showed money
managers and other large speculators cut their bearish bets in U.S. copper
futures by 7,551 contracts to 3,224 contracts in the week ended Aug. 21.
 
    In the physical copper market, there has been a pick-up in spot purchases in
China with investors encouraged by news that the country's third-biggest
smelter, Jinchuan Group, has plans to buy up to 150,000 tonnes of the metal
through its trading unit by the end of September. 
    The trend may push the arbitrage window open, making it profitable for
Chinese buyers to import copper based on LME prices. 
    Traders have also reported more spot buying in China as investors expected
large Chinese smelters to export more copper, based on a new tolling tax
incentive.
    "Many smelters have been buying domestic copper to fulfil their local
contracts as the high prices of LME copper over Shanghai copper is pushing up
their imported copper concentrate costs, further squeezing their profit
margins," said one Shanghai-based trader.
    Jiangxi Copper Co Ltd , the top producer of the metal in
China, has also set up a wholly owned subsidiary in Hong Kong to reduce
financing costs for imports and potential acquisitions, company spokesman Pan
Qifang said on Thursday. 

 Metal Prices at 1805 GMT
                                                                  
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       347.45       -0.90     -0.26     343.60      1.12
  LME Alum      1917.00       12.50     +0.66    2020.00     -5.10
  LME Cu        7639.00      -45.50     -0.59    7600.00      0.51
  LME Lead      1970.00       18.00     +0.92    2035.00     -3.19
  LME Nickel   16470.00       -5.00     -0.03   18710.00    -11.97
  LME Tin      20895.00      945.00     +4.74   19200.00      8.83
  LME Zinc      1879.00       17.00     +0.91    1845.00      1.84
  SHFE Alu     15380.00       25.00     +0.16   15845.00     -2.93
  SHFE Cu*     55900.00      160.00     +0.29   55360.00      0.98
  SHFE Zin     14770.00      135.00     +0.92   14795.00     -0.17
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
 ($1 = 6.3545 Chinese yuan)

 (Editing by Richard Pullin, Miral Fahmy, Tim Dobbyn and Bob Burgdorfer)

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