September 26, 2011 / 10:21 AM / 8 years ago

METALS-Copper drops to 14-mo low on recession fears

 * Industrial metals pressured, copper hits 14-mo low
 * COMEX copper sees 200-day MA support on weekly chart
 * Coming up: U.S. consumer confidence data Tuesday
 (Rewrites, adds New York dateline/byline, updates with New York closing copper price, adds graphic and analyst comments)
 By Chris Kelly and Harpreet Bhal
 NEW YORK/LONDON, Sept 26 (Reuters) - Copper dropped under $7,000 a tonne in the London market for the first time in 14 months on Monday as the threat of a global recession had investors worried demand for the metal will continue to deteriorate.
 Copper was down for the seventh-straight day and moving deeper into bear-market territory for the year. It is down nearly 30 percent from its mid-February record above $10,000.
 Aluminium futures CMAL3 plumbed a one-year low of $2,155 a tonne, lead CMPB3 tanked 4 percent, zinc CMZN3 touched its own 14-month low, and nickel CMNI3 shed more than a percent.
 The complex was unable to derive much support from a rebound in equities and the rally in the euro versus the dollar, as macro economic concerns weigh. In Germany a gauge of business sentiment fell for a third month in a row in September and in the United States housing remained depressed. [ID:nL5E7KQ13G] [ID:nS1E78P0CJ] [USD/]
 "It shows you that there are problems," Bill O'Neill, partner of LOGIC Advisors in Upper Saddle River, New Jersey, said of the German data.
 "We are trying to bottom out but there is no enthusiasm on the buy side. There's just a lack of affinity for commodities," he said.
 London Stock Exchange (LME) three-month copper CMCU3 crumbled to a session trough at $6,800 a tonne -- its lowest since July 2010 -- before recovering to end with a $94 loss at $7,266.
 That modest recovery extended into New York trading hours, helping give the key December COMEX contract HGZ1 a mild 0.30-cent lift by the close to $3.2830 per lb.
 With a weaker macro picture dominating sentiment, investors were becoming more reliant on technicals, where budding signs of chart support developed on Monday.
 The front-month COMEX contract HGc1 topped its 200-day moving average target on the weekly charts, CitiFX analysts pointed out Monday in a note to clients.
 Renewed downside pressure could push prices down to $2.93 per lb, which marks a 50-percent retracement of the rally from the late 2008 low, and then the June 2010 low at $2.72, analysts said.
 (Graphic: link.reuters.com/nyp93s )
 Trading continued to be busy as volatility in the markets remained high. More than 75,000 lots were traded in New York, a little more than two-thirds above the 30-day norm, according to preliminary Thomson Reuters data.
 "Metals are not only being buffeted by the euro head winds, but seem to be under additional pressure on increasing signs of a deteriorating global macro picture that inevitably will manifest itself through weaker metal demand," MF Global senior commodity metals analyst Edward Meir said in a note.
 Copper lost a bit of support from its supply side after about 4,200 workers at Freeport McMoran Copper & Gold Inc's (FXC.N) Indonesian mine, mainly contractors and non-union staff, returned to work, allowing some mining to resume. [ID:nL3E7KQ1M1]
 Bargain-hunting was expected following recent falls, but Chinese buyers are likely to be cautious given the market volatility and ahead of a week-long national holiday in China next week.
 "There will be some buying over the next week but right now considering the national holidays at the beginning of October, I think any buying will be very cautious," said Eugen Weinberg, analyst at Commerzbank.
 One trader said: "Copper has gone through the $7,000 level down to $6,800 but these are just psychological levels rather than significant technical levels. We've seen some buying on dips but people are not convinced that we've seen a bottom yet."   <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^   Metals database   here   Global metal stocks link.reuters.com/deg67n   LME stocks vs prices r.reuters.com/hub62s   TABLES: here   GOLD: here   COPPER: here   ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>  Metal Prices at 1750 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     329.90      1.90     +0.58     444.70    -25.82  LME Alum    2204.00     -2.00     -0.09    2470.00    -10.77  LME Cu      7266.00    -94.00     -1.28    9600.00    -24.31  LME Lead    1877.00    -78.00     -3.99    2550.00    -26.39  LME Nickel 18000.00   -270.00     -1.48   24750.00    -27.27  LME Tin    20325.00    125.00     +0.62   26900.00    -24.44  LME Zinc    1881.00    -34.00     -1.78    2454.00    -23.35  SHFE Alu   16000.00   -495.00     -3.00   16840.00     -4.99  SHFE Cu*   53320.00  -3620.00     -6.36   71850.00    -25.79  SHFE Zin   14340.00   -715.00     -4.75   19475.00    -26.37 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07  (Editing by Jason Neely and Bob Burgdorfer)   

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