Copper demand support
METALS-Copper bounces after 3-day fall, physical demand supports
Tuesday Nov 2nd 2011 10.12am GMT
* Chinese copper imports at 18-month high* Failure of U.S. plan to cut debt spooks investors* Coming next: U.S. GDP data, 1330 GMTBy Silvia AntonioliLONDON, Nov 22 (Reuters) - Copper rose about 2 percent on Tuesdayas physical buying interest increased after three days of price declines butfunding stress and worries over the mounting debt crisis in the euro zone andthe United States capped gains.Three-month copper on the London Metal Exchange was up 1.55percent to $7,423.50 a tonne at 0945 GMT, following three sessions of losses.It fell as low as $7,252 on Monday, its weakest in almost a month."There wasn't any additional bad news about the debt crisis today andphysical demand looks quite resilient... There are some pockets of buyingwhen copper falls," Credit Suisse analyst Stefan Graber said."In the metals market there is quite a contrast between solid fundamentaldata and the deleveraging pressure."The inability of U.S. and European leaders to tackle the mounting debtcrisis affecting their countries was weighing on market sentiment andlimiting investors desire to bet on assets such as industrial metals.U.S. lawmakers abandoned their high-profile effort to rein in thecountry's ballooning debt on Monday in a sign that Washington likely will notbe able to resolve a dispute over taxes and spending until 2013.In the euro zone, the debt crisis swept closer to the heart of Europedespite a clear-cut election victory in Spain for conservatives committed toausterity, adding to pressure on the European Central Bank to act moredecisively.Metals prices would benefit from intervention of the central banks inEurope and the U.S."I expect there could be a relief rally caused by a coordinated monetarystimulus from central banks, the Fed in particular," Gianclaudio Torlizzi atmetals consultancy T-commodity said in a research note."Such an action would prompt a strong increase on prices of metals andother commodities, similar to what happened with the previous two stimuluscarried out by the Fed."SOLID PHYSICAL DEMANDHelping metals, the dollar eased slightly against a basket of currenciesbut was still near a six-week high due to a recent sharp pullback in globalrisk appetite as the sovereign debt storm intensified on both sides of theAtlantic.A softer U.S. currency makes dollar-priced commodities such as basemetals more affordable for holders of other currencies.Also supporting industrial metals, data pointed to solid real demand.China's imports of refined copper for example, rose 7.2 percent inOctober on the month to hit an 18-month high, fuelled by steady demand.Underpinning copper, an ongoing strike at a large mine in Indonesia ownedby Freeport-McMoRan Copper & Gold Inc, has reduced supplyavailability.An end to strike was not in sight yet as Richard Adkerson,Freeport-McMoRan chief executive this week described striking workers' wagedemands at its mines as "excessive and unreasonable".Also highlighting good physical buying interest, the level of metalsinventories in LME-monitored warehouses has broadly fallen in the last fewweeks and latest data showed a further decline for all metals except forcopper and nickel.Copper inventories MCU-STOCKS registered a 1,100 tonne increase to397,075 tonnes but were still down more than 16 percent since the beginningof last month.