December 18, 2012 / 4:16 PM / in 5 years

METALS-Copper consolidates after fiscal cliff progress

* Battle in aluminium sparks stock deliveries
    * Tin rises to highest in 8-1/2 months
    * Any rallies curtailed by lack of risk appetite - analyst

    By Eric Onstad and Stephen Eisenhammer
    LONDON, Dec 18 (Reuters) - Copper consolidated gains on
Tuesday, following a one month rise, as progress in negotiations
to avert the U.S. fiscal cliff eased fears the world's biggest
economy could tip into recession.
    The prospect of a deal to head off automatic spending cuts
and tax hikes may already be partly priced into the copper
market, which has gained about 6 percent since mid-November,
compared with falls of about 1 percent in spot gold and
2.5 percent in Brent crude oil.
    Many markets rallied as news emerged on Monday night that
differences over resolving the fiscal cliff narrowed
significantly as President Barack Obama made a counter-offer to
Republicans that included a major change in position on tax
hikes for the wealthy. 
    But three-month copper on the London Metal Exchange
slipped 0.2 percent to $8,045.24 per tonne at 1551 GMT, giving
up gains in morning trading. Copper closed nearly flat on
    "The equities reacted favourably last night to this in New
York and logically one would assume that this would be a
positive for commodities as well," said Stephen Briggs, metals
strategist at BNP Paribas in London.
    "But because base metals have been faring pretty well in the
last few weeks, there may be less mileage for them, than there
might be for some other sectors."
    Copper has also been boosted in recent weeks on signs of a
revival in economic growth in top consumer China, which
accounted for 40 percent of refined demand last year.
    Further support was expected following the approval on
Monday by U.S. regulators of JPMorgan Chase & Co's 
controversial plan to launch a copper exchange-traded fund
backed by actual metal stockpiles. 
    Stocks for the ETF will be held in non LME-registered
warehouses, where costs are cheaper, with Shanghai one of the
suggested locations.
    But the boost from the announcement could take some time to
be felt in the market.
    "We could still be some months away from the prospectuses
being posted out and investors starting to buy, so it looks a
bit of a slow burner," Robin Bhar, analyst at Societe Generale,
    Bhar added that investors were sitting out until the fiscal
cliff impasse was resolved, but remained optimistic for next
    "The rally for the moment is probably curtailed by a lack of
any risk appetite until the fiscal cliff gets sorted out." 
    "The prospects for next year are looking pretty good. China
is rebounding and if the fiscal cliff can be resolved quickly...
everything bodes well for a continued recovery in the U.S.," he

    A battle in aluminium on the LME between a major long holder
and shorts sparked hefty deliveries of stocks into warehouses,
which erased heavy premiums for cash material seen in recent
    Cash spiked to a premium of up to $47 a tonne over the
benchmark three month contract on Monday, the
strongest since Feb. 2007, but flipped to a discount of $15 on
    Analysts said the move back into its usual contango
structure where cash prices are lower than longer dated ones
after short holders delivered aluminium into LME warehouses. LME
aluminium stocks have jumped by 64,325 tonnes
over the past two days.
    "There are millions of tonnes of unreported inventory of
aluminium that have built up in the last five years so there's
plenty of scope for more material to hit the market," Briggs
    The increase in LME stocks appeared to weigh on three-month
aluminium, which fell 0.3 percent to $2,099 per tonne in
official trading.
    Other metals fared better.
    Tin, which many analysts expect to be the only base
metal with a deficit next year, gained 0.6 percent to $23,450
per tonne at 1535 GMT after touching a intraday peak of $23,500,
the highest in 8-1/2 months.
    Zinc rose to a 2-1/2 month high of $2,107 a tonne,
up 0.8 percent on Monday's close.
    Lead added 0.4 percent to $2,308.25 a tonne and
nickel climbed 1 percent to $17,783.
 Metal Prices at 1532 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
  COMEX Cu       364.70       -0.75     -0.21     344.75      5.79
  LME Alum      2092.00      -13.50     -0.64    2020.00      3.56
  LME Cu        8029.50      -30.50     -0.38    7600.00      5.65
  LME Lead      2305.00        9.00     +0.39    2034.00     13.32
  LME Nickel   17727.00      122.00     +0.69   18650.00     -4.95
  LME Tin      23377.00       77.00     +0.33   19200.00     21.76
  LME Zinc      2079.00      -11.00     -0.53    1845.00     12.68
  SHFE Alu     15300.00     -105.00     -0.68   15845.00     -3.44
  SHFE Cu*     57880.00     -250.00     -0.43   55360.00      4.55
  SHFE Zin     15545.00      -80.00     -0.51   14795.00      5.07
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below