January 19, 2012 / 10:31 AM / 8 years ago

METALS-Copper hits 4-month high as euro fears ebb

* IMF seeks $600 bln in new funds for Europe
    * Euro up on solid response to European bond auctions
    * Copper stocks in LME warehouses fall to fresh 13-mth low

    By Harpreet Bhal and Maytaal Angel	
    LONDON, Jan 19 (Reuters) - Copper rose to a four-month high on
Thursday as strong demand at European bond auctions lessened euro zone debt
concerns and as U.S. data boosted prospects for improved metals demand.  	
    Benchmark copper on the London Metal Exchange (LME) was bid up more
than 1 percent at $8,360 a tonne at 1523 at the kerb close from $8,235 on
Wednesday. Earlier in the session the metal used in power and construction
reached its highest level since Sept. 20 at $8,410 a tonne. 	
    "There's some decent numbers coming out of the U.S., there's greater
confidence in Europe and there's a potential for support coming out of China to
avoid a hard landing," said Deutsche Bank analyst Daniel Brebner.	
    "This is a critical quarter, there's growing confidence that the euro zone
can stay together and will stay together and that politicians will come together
to support the region."	
    Spain sold 6.61 billion euros ($8.5 billion) of government bonds on
Thursday, more than its announced target, supported by domestic banks and a
pick-up in appetite for riskier assets.  	
    Also aiding metals and other risk assets was news the International Monetary
Fund is seeking to more than double its war chest by raising $600 billion to
help the euro zone pull out of its two-year-old sovereign debt crisis.
 	
    On the other side of the Atlantic, U.S. numbers were mixed but were not poor
enough to dispel signs that have accumulated over the past few months that the
world's largest economy is recovering. 	
    U.S. jobless claims fell to near a four-year low last week, while inflation
readings in December were tame, though December numbers on housing starts and
factory activity in the U.S. mid-Atlantic region missed expectations.
    	
    "The path of least resistance in base metals seems to be higher as the
calmer conditions in the European debt markets are allowing the euro to
strengthen," INTL FCStone said in a note.	
    "Things could unravel quickly, particularly if any one of the upcoming
auctions falls flat. Having said that, this will likely not occur until sometime
down the road, and so in the meantime the better tone in the European credit
markets should offer support, as should the improving macro picture coming out
of the U.S."	
    The euro was up versus the dollar, making dollar-priced metals cheaper for
European investors, with talks between Greece and its creditors still
proceeding. 	
    Three sources close to the discussion said more progress is needed before a
bond swap to reduce the country's towering debt pile is reached. 
 	
    Copper prices fell by around 21 percent last year, the first annual drop
since 2008, as an uncertain global economic outlook raised fears about the
metal's demand prospects.	
    The metal is trading around 10 percent higher so far this month.   	
    	
    	
    FALLING STOCKS	
    Copper stocks in LME-registered warehouses continued to show a declining
trend, dropping by 1,300 tonnes to a fresh 13-month low of 351,200 tonnes, which
indicates demand for physical metal is gathering pace. 
    Upbeat news on supply capped gains in copper, however. Pan Pacific Copper
, Japan's biggest copper smelter, has recently received copper
concentrate shipments from the Freeport-McMoRan Copper & Gold Grasberg
mine in Indonesia after a three-month strike at the mine ended in December.
 	
    Aurubis AG, Europe's largest copper producer, warned of slowing
demand and price volatility on Thursday, although profits were up 84 percent in
its last financial year. 	
    "Price volatility is to be expected ... We expect uncertainty in the further
demand trend in our copper product sales," the company said, while also saying
there was good cause to expect metal prices to remain high. 	
    In other metals, aluminium ended up more than 1 percent at $2,232
from $2,204 a tonne on Wednesday, having earlier hit its highest since late
October at $2,237.75. 	
    Zinc, used in galvanising, ended at $2,030 from a close of $2,001,
having earlier hit its highest since early December at $2,035, while sister
metal lead closed at $2,183 a tonne from $2,139, having reached its
highest since late September at $2,187.	
    Tin ended at $21,900 a tonne from $21,780, having earlier risen to
its firmest since mid-November at $22,135, while stainless steel ingredient
nickel closed up at $20,200 a tonne from $19,495, having hit its highest
since late October at $20,201. 	
 Metal Prices at 1715 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
  COMEX Cu       378.85        3.90     +1.04     334.65     13.21
  LME Alum      2231.00       27.00     +1.23    2230.00      0.04
  LME Cu        8360.00      125.00     +1.52    7375.00     13.36
  LME Lead      2182.00       43.00     +2.01    2432.00    -10.28
  LME Nickel   20185.00      690.00     +3.54   18525.00      8.96
  LME Tin      21850.00       70.00     +0.32   16950.00     28.91
  LME Zinc      2030.00       29.00     +1.45    2560.00    -20.70
  SHFE Alu     16365.00       -5.00     -0.03   17160.00     -4.63
  SHFE Cu*     60560.00     1110.00     +1.87   59900.00      1.10
  SHFE Zin     15660.00      155.00     +1.00   21195.00    -26.11
 ** 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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