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METALS-Copper slips late after Fed cuts U.S. growth rates
June 22, 2011 / 4:24 PM / in 6 years

METALS-Copper slips late after Fed cuts U.S. growth rates

 * US Fed lowers U.S. growth forecasts
 * Dollar bounces against euro after Fed press conference
 * LME Detroit aluminum stockpiles down since May
 * Coming up: U.S. jobless claims, new home sales Thursday
 (Rewrites, removes LONDON dateline/byline, adds U.S. Fed detail
and graphic, updates prices)
 By Chris Kelly
 NEW YORK, June 22 (Reuters) - Copper held in negative
territory late Wednesday as the dollar bounced against the euro
and the Federal Reserve cut its forecasts for U.S. economic growth
but offered no indication of further monetary policy support.
 "The overall tone of the statement is cautious ... there were
not any suggestion on follow-through measures beyond QE2, apart
from indicating that they will continue to monitor the outlook and
financial developments," said Peter Buchanan, commodities analyst
and senior economist at CIBC in Toronto.
 Fed Chairman Ben Bernanke said the U.S. economy should grow
2.7 to 2.9 percent this year, a forecast that was marked down from
a 3.1 to 3.3 percent projection released in April.
 In New York, the key September COMEX contract HGU1 ended the
session flat at $4.1070 per lb, but edged lower in after-hours
trade after the Fed's downward growth revision.
 "It's down on worries that the U.S. economy is going to remain
sluggish for at least another quarter or two," said Bob Haberkorn,
senior market strategist with Lind-Waldock in Chicago.
 London Metal Exchange (LME) benchmark copper CMCU3 ended the
day down $60 at $9,020 a tonne.
 Prices are down more than 10 percent from a record high of
$10,190 set in mid-February.
 As widely expected, the Fed said it will maintain interest
rates at exceptionally low levels for an extended period. It also
said the pace of U.S. economic recovery was proceeding more slowly
than it had expected, though primarily due to temporary factors.
 "The slower pace of recovery reflects in part factors that are
likely to be temporary, including the damping effect of higher
food and energy prices on consumer purchasing power and spending
as well as supply-chain disruptions associated with the tragic
events in Japan," the Fed said in a statement at the conclusion of
a two-day meeting. [ID:nN1E75K22F]
 Prices found temporary support from a union worker standoff at
Chilean miner Codelco's giant Chuquicamata copper mine, but after
a five-hour road blockade into the mine, the union decided to back
down. [ID:nN1E75L0R8]
 Volatility was at a high in the currency markets. The euro
rallied and then surrendered its gains against the dollar as
Bernanke said he believed U.S. growth will pick up going into
2012. [FRX/]
 COPPER RESTOCKING
 The fall in monthly Chinese copper imports is a result of
drawdowns from stockpiles as high as 1.2 million tonnes that the
world's top copper consumer has been building since the end of
2008, said Briggs of BNP Paribas. [ID:nL3E7HL1ID]
 "Apparent consumption and local production points to Chinese
demand actually falling in the first few months of the year, is
simply not credible for an economy growing at 9 percent," he said.
BNP Paribas expects copper prices to hit a new high of at least
$11,000 a tonne in late 2011 or early 2012.
 "We've been pleasantly surprised by a number of positive
surprises and indications that what's happened over the last six
months is probably a destocking phase which is now being followed
by a restocking phase," said Nic Brown, head of commodity research
at Natixis.
 In other metals, aluminum CMAL3 closed up $8 on the day at
$2,549 per tonne.
 LME stocks of the metal continued to decline, particularly in
Detroit where inventories have been in a downward trend since May.
[MAL-USDET-TOT]
 (Graphic: link.reuters.com/fyp32s )
 "The fact that LME stocks are decreasing in aluminum could
actually be bearish if it means that some of the metal locked in
financing programs is beginning to roll out," Edward Meir, metals
analyst with MF Global, warned in a daily market comment.
 Metal Prices at 1858 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
yuan/T
 Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                         move
 COMEX Cu       408.80       -1.90     -0.46     444.70     -8.07
 LME Alum      2545.00        4.00     +0.16    2470.00      3.04
 LME Cu        9010.00      -70.00     -0.77    9600.00     -6.15
 LME Lead      2544.00       84.00     +3.41    2550.00     -0.24
 LME Nickel   22150.00      250.00     +1.14   24750.00    -10.51
 LME Tin      25375.00      -75.00     -0.29   26900.00     -5.67
 LME Zinc      2251.00       39.00     +1.76    2454.00     -8.27
 SHFE Alu     17000.00      -10.00     -0.06   16840.00      0.95
 SHFE Cu*     67440.00     -530.00     -0.78   71850.00     -6.14
 SHFE Zin     17225.00      -30.00     -0.17   19475.00    -11.55
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Melanie Burton in London; editing by Jim
Marshall)


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