November 12, 2012 / 11:31 AM / 5 years ago

METALS-Copper rebounds from 2-month lows on dollar, China growth

* Copper gains as euro steadies after Greek budget deal
    * China copper imports fall sharply in October, cap gains
    * U.S fiscal cliff looms, dents risk appetite
    * China issues tender to stockpile aluminium

    By Maytaal Angel
    LONDON, Nov 12 (Reuters) - Copper bounced back from a two-month low on
Monday after Greece's lawmakers gave the euro a boost against the dollar by
approving budget reform while data offered reassurance on a recovery in China
from its worst economic patch in three years.
    Gains were capped by concerns about U.S. and eurozone debt but a dip in the
dollar index made commodities priced in the U.S. unit less expensive for
holders of other currencies, encouraging buying. 
    In China, authorities said at the weekend that the economy was turning the
corner and was likely to meet its growth target for the year - good news for a
Communist Party meeting in Beijing to anoint new leaders for the next decade. 
    Chinese industrial output, exports and retail sales all beat expectations in
October, while inflation eased more than expected. 
    On the downside, however, trade data showed a sharp fall off in copper
imports into China, which consumes about 40 percent of the world's copper.
    In the United States, the economy faces a budget squeeze that could see
nearly $600 billion worth of spending cuts and tax increases in early 2013 if
Republicans and Democrats fail to agree a last minute budget deal.
    Three-month copper on the London Metal Exchange closed at $7,638 per
tonne, reversing losses from the previous session when it closed at $7,560, down
more than half a percent.
    "Prices have rebounded a little because of better than expected Chinese
trade data for October (but) we see slowing Chinese copper imports over the next
few months, because of the crackdown on collateralised financing (of copper),"
said Citi analyst David Wilson.
    "At some point this is going to be factored into copper price," Wilson
added.
    Copper hit its lowest since Aug. 31 on Friday at $7,506 a tonne. Prices have
fallen for the past five weeks, erasing gains made after Europe and the U.S.
retained easy monetary conditions in September.

    COPPER IMPORTS FALL
    China's copper import growth slowed sharply to hit a 17-month low in
October, a delayed effect of the negative arbitrage conditions over the summer
caused by higher international prices compared to the domestic market. 
    Futures-based arbitrage for copper, based on three-month LME and Shanghai
Futures Exchange prices, has turned positive for imports, although including
premiums of $40-$60 paid for stock in bonded warehouses, they are not yet in
profitable territory, a Shanghai-based trader said.
    In other metals, aluminium closed at $1,968 a tonne from $1,921.
    Helping aluminium, two sources who received the tender notice said on Monday
that China's State Reserves Bureau (SRB) issued a tender to buy 160,000 tonnes
of the light metal from local smelters. Market players said another tender may
follow and that the move pointed to a broader return to stockpiling of metals
and more direct stimulus of the economy which would help metals demand.
 
    Battery material lead closed at $2,160 a tonne from $2,149,
struggling to add to the strong gains seen over the past few weeks - a result of
physical market tightness evident in LME spreads data. 
    That data showed the premium for cash lead against the three-month contract
surged to $28.50 a tonne by Friday's close, its highest in more than a year and
up from an $8 discount on Oct. 22. 
    The market for lead has tightened due in part to thinning scrap supply
brought about by a mild winter in the U.S. and Europe last year that caused
fewer batteries to fail.
    Supply tightness has also been exacerbated by big banks and trade houses
pulling metal into LME-monitored warehouses with long backlogs.                 
                                           
    Tin, untraded at the close, was last bid at $20,350 from $20,300 at
the close on Friday, with data showing the premium for cash tin over the three
month price at $30 a tonne as of Friday, indicating tight nearby
supply.
    Zinc closed at $1,931 per tonne from $1,890. Data shows 60,700
tonnes were booked to leave LME warehouses in Antwerp, extending the length of
the multi-month queue there and making more zinc supply unavailable.
    Stainless-steel ingredient nickel, the worst performing LME base
metal this year, closed at $16,055 a tonne, from $15,950.
    
 Metal Prices at 1716 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       345.80        1.25     +0.36     344.75      0.30
  LME Alum      1968.50       47.50     +2.47    2020.00     -2.55
  LME Cu        7628.25       68.25     +0.90    7600.00      0.37
  LME Lead      2163.50       14.50     +0.67    2034.00      6.37
  LME Nickel   16072.00      122.00     +0.76   18650.00    -13.82
  LME Tin      20351.00       51.00     +0.25   19200.00      5.99
  LME Zinc      1924.00       34.00     +1.80    1845.00      4.28
  SHFE Alu     15230.00      -10.00     -0.07   15845.00     -3.88
  SHFE Cu*     55640.00     -290.00     -0.52   55360.00      0.51
  SHFE Zin     14820.00     -105.00     -0.70   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

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