Copper edges up on Asian buying $4.05/lbMETALS-Copper edges up on Asian buying, weaker dollar
Wed Aug 17, 2011 12:28pm GMT
* LME-SHFE copper arbitrage at over 400 yuan
* Dollar falls against basket of currencies
* Coming up: U.S. PPI inflation yy, NSA, July; 1230 GMT
By Silvia Antonioli
LONDON, Aug 17(Reuters) - Copper rose on Wednesday on buying interest from
Asia and as the dollar weakened, but gains were limited as fears of a slower
economic recovery, which may dent metals demand growth, dampened market
sentiment.
Benchmark copper on the London Metal Exchange rose 0.6 percent to
trade at $8,895 a tonne in official rings from $8,830 on Tuesday, when it hit
its lowest in a week at $8,751.
The metal used in power and construction has fallen around 13 percent from
the record high $10,190 a tonne it hit on Feb. 15.
"There are pockets of physical buying but it's price based...it's not full
restocking," said Steve Hardcastle, head of metals trading at Sucden Financial.
"There is a certain amount of short-covering taking place in Shanghai and
the arbitrage window has been there, or there abouts, for the last two days: LME
buying, Shanghai selling."
The LME benchmark contract was trading at a discount to the Shanghai Futures
Exchange most active contract and this prompted more buying from Asia.
If the arbitrage, which opened earlier this month, holds at current levels
of around 400 yuan it could encourage increased refined copper imports into
China in the next few months, traders have said.
"Chinese copper prices are outperforming LME prices, which would incentivise
Chinese consumers to step up imports," Credit Suisse said in a note.
"Based on our view that the economy should recover moving along H2 2011, we
think the current price weakness across metals offers entry opportunities."
China accounts for nearly 40 percent of total world copper demand, and the
market has been anxiously waiting for it to start buying again after a lengthy
period of destocking.
A softer dollar also supported industrial metals. A weak U.S. currency makes
dollar-priced commodities more affordable for holders of other currencies.
WEAKER GROWTH
But economic problems in the Western world kept base metals subdued.
Data in the last few days, including weak German and Euro zone growth,
pointed to a weaker-than-previously-expected economic recovery, raising concerns
over metals demand growth.
The sovereign debt crisis in Europe has also prompted investors to switch
from commodities perceived as risky, including industrial metals, to safe havens
such as gold.
On a more positive note, data on Tuesday showed that U.S. industrial output
rose in July at its fastest pace in seven months.
"The (metals) market is undecided but it is likely that growth will slow
down in the second part of the year...it is yet to be seen whether this is
already priced in," said Eugen Weinberg, commodities analyst at Commerzbank.
The outcome of a meeting between Nicolas Sarkozy and the Angela Merkel put
the European and U.S. equity markets under pressure but had little impact on
metals, analysts said.
The leaders of France and Germany, under pressure to counter Europe's debt
market crisis, have agreed to float proposals in September for a tax on
financial transactions.
"They (the proposals) were so general," said VTB Capital analyst Andrey
Kryuchenkov. "We will need to look at the details of the proposal in
September."
Tin traded at $24,400 from $24,150 while zinc , used to
galvanize steel, was untraded in rings but was bid at $2,190 from $2,181 at
Tuesday's close.
Battery material lead changed hands at $2,385 from $2,356 and
aluminium was at $2,384 from $2,375. Stainless steel material nickel
,untraded in rings, was bid at $21,650 from $21,700.
Metal Prices at 1206 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 402.95 3.55 +0.89 444.70 -9.39
LME Alum 2383.00 8.00 +0.34 2470.00 -3.52
LME Cu 8895.00 65.00 +0.74 9600.00 -7.34
LME Lead 2387.00 31.00 +1.32 2550.00 -6.39
LME Nickel 21650.00 -50.00 -0.23 24750.00 -12.53
LME Tin 24400.00 250.00 +1.04 26900.00 -9.29
LME Zinc 2190.00 9.00 +0.41 2454.00 -10.76
SHFE Alu 17310.00 160.00 +0.93 16840.00 2.79
SHFE Cu* 66800.00 310.00 +0.47 71850.00 -7.03
SHFE Zin 16975.00 375.00 +2.26 19475.00 -12.84
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07