April 28, 2011 / 7:09 PM / 8 years ago

METALS-Copper in weak finish after disappointing U.S data

 * Copper hit by slowing economic prospects in U.S.
 * Weak U.S. GDP, jobs data keep dollar under pressure
 * Aluminium at almost 3-year high on rising cost prospects
 * Coming up: U.S. regional manufacturing data Friday
 (Recasts, adds New York dateline/byline, updates with New
York closing copper price, adds analyst comments)
 By Chris Kelly and Melanie Burton
 NEW YORK/LONDON, April 28 (Reuters) - Copper erased earlier
gains to end easier on Thursday, influenced by slowing economic
conditions in the U.S. that underscored the bearish sentiment
surrounding demand prospects at the start of the year.
 Copper's mildly negative tone came after U.S. gross
domestic product for the first quarter slowed to a 1.8 percent
annual pace. [ID:nCAT005418]
 "Copper at the moment seems to be focusing on the potential
slowing economic conditions in the U.S.," said Frank Lesh,
broker and futures analyst with Future Path Trading in Chicago.
The number is "certainly affecting market psychology."
 London Metal Exchange (LME) benchmark copper CMCU3 eased
$1 to close at $9,320 a tonne. In New York, prices recovered
from the late sell-off in London to end firm, with the most-
active July COMEX copper contract HGN1 rising 1.50 cents at
$4.2615 per lb.
 Still, prices are down more than 8 percent from February's
record highs of $10,190 a tonne and $4.6535 per lb.
 The negative close came a day after the U.S. Federal
Reserve said it would complete its $600 billion bond-buying
program in June and signaled it was in no rush to scale back
its support for the world's largest economy. [ID:nN26291565]
 Volumes slowed at the end of a holiday-shortened week in
London, with the London Metal Exchange (LME) set to close its
doors Friday for a royal wedding and again on Monday for a bank
holiday.
 "Copper is having a hard time being pushed about the
place," said Danske Bank analyst Arne Lohmann Rasmussen, adding
players "are a bit worried at signs that the global recovery
indicators are pointing down."
 Adding to the economic jitters, U.S. claims for
unemployment benefits jumped to their highest level since
January. [ID:nN28251961]
 The U.S. dollar extended losses against the euro and the
yen after the GDP and jobless figures. A softer dollar makes
metals cheaper for holders of other currencies.
 "Copper is struggling a bit, but each time we get to the
end of the quarter and the mining companies release their
production results, then copper seems to get a bit of a lift
because everyone remembers that there are supply problems,"
said analyst David Wilson of Societe Generale.
 BHP Billiton is ploughing $554 million into boosting output
at Chile's Escondida, the world's No. 1 copper mine, where
output has dwindled in recent years due to declining ore
grades. [IDnL3E7EU395]
 Chile, which holds the world's top copper reserves and is
the No.1 producer, is expected to steadily increase output in
the next two years with new mine projects and upgrades,
although its output fell 0.1 percent in March. [ID:nSGO002181]
 COPPER STOCKS RISING
 LME copper stocks MCU-STOCKS rose 150 tonnes to 463,650
tonnes, their highest since mid-June, the latest data showed.
The inventories have climbed by a third since mid-December.
 "The steady rise in copper, zinc and lead inventories is a
prime cause for concern," Commerzbank said in a note. "If the
increase in stocks is not halted soon, the upbeat view taken so
far of this year's copper market balance -- a large shortfall
in supplies -- may have to be revised, with the corresponding
adverse impact on prices."
 LME zinc stocks MZN-STOCKS have jumped by nearly 30,000
tonnes this month.
 Zinc CMZN3 closed up $7 at $2,247 a tonne. Aluminium
CMAL3 ended at $2,767 a tonne from a bid of $2,743.50 on
Wednesday. Earlier, it touched $2,778.80, its highest since
August 2008 on prospects that rising power prices will push up
input costs for the energy intensive metal.
 Metal Prices at 1842 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     426.30        1.65     +0.39     444.70     -4.14
LME Alum    2767.50       20.50     +0.75    2470.00     12.04
LME Cu      9320.00       -1.00     -0.01    9600.00     -2.92
LME Lead    2491.00       -7.00     -0.28    2550.00     -2.31
LME Nickel 26825.00      195.00     +0.73   24750.00      8.38
LME Tin    32000.00     -700.00     -2.14   26900.00     18.96
LME Zinc    2247.00        7.00     +0.31    2454.00     -8.44
SHFE Alu   16845.00       35.00     +0.21   16840.00      0.03
SHFE Cu*   70050.00      500.00     +0.72   71850.00     -2.51
SHFE Zin   17480.00      235.00     +1.36   19475.00    -10.24
** 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 Sue Thomas in London; editing by
Anthony Barker and Rene Pastor)


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