METALS-China jitters, dollar send copper to 2-month low

Date May 05 2010 13:57:06 Source:Reuters
    * China move shows it keen to maintain healthy economy
    * Lead, zinc fall some 5 percent 
    * Coming up: U.S. March factory goods orders at 1400 GMT
    (Updates prices, adds details)
    By Pratima Desai and Maytaal Angel
    LONDON, May 4 (Reuters) - Copper tumbled to two-month lows on Tuesday as the dollar rose against the euro on lingering worries over Greek debt and the market fretted about monetary tightening in China, the world''s largest copper consumer.
    Sister metals zinc and lead hit multi-month lows, falling nearly 5 percent, tracking falls in copper and under further pressure from gains in London Metal Exchange inventories.
    Benchmark copper <CMCU3> on the London Metal Exchange was at $7,109 a tonne at 1339 GMT from $7,430 on Friday. The metal used in power and construction earlier touched $7,100.75, its lowest since Feb. 26.
    China on Sunday raised the proportion of deposits that lenders must keep in reserve at the central bank, another step in its months-old campaign to mop up excess cash in the economy at a time when inflation is on the rise. [ID:nTOE64100Q]
    "Nervousness about Chinese tightening seems to be behind the losses today, but I''m not convinced it''s much of an issue," said David Wilson, analyst at Societe Generale.
    "Seventy percent of lending to corporates in the second half of last year went back into deposit accounts. In terms of mortgages, a vast proportion of property in China is bought without debt."
    Also weighing on copper, the dollar hit a one-year high versus the euro as worries about Greece and other indebted euro zone countries continued to weigh on the single currency. A
stronger dollar makes dollar-priced metals costly for non-U.S. investors. [USD/]
    "The dollar actually strengthened on the EU bail-out announcement, suggesting that currency markets are giving the rescue package a "thumbs down" which, in turn, means potentially more headwinds for metals from the currency point of view," said MF Global in a note.
    Also knocking sentiment, data out overnight showed HSBC''s China Purchasing Managers'' Index (PMI) dropped in April to a six-month low of 55.4 from 57.0 in March as output, new orders and employment all slowed. [ID:nBJL002020]
    On the plus side, analysts said strong manufacturing and car production data from the United States, the world''s largest economy, will help support base metals. [ID:nN03209439]
    In addition, data out earlier showed the euro zone''s manufacturing sector continued to power ahead in April as output reached the highest level in almost 10 years, driven by a record performance in Germany. [ID:nLDE6420M2]
    "Manufacturing is what really counts for base metals," a London-based metals trader said.
    Also a plus are falling stocks in LME warehouses for some metals. Copper stocks are down more than 58,000 tonnes since the middle of February to 496,975 tonnes, while aluminium stocks are down 111,200 tonnes since hitting a record high above 4.640 million tonnes on Jan. 21.
    Aluminium <CMAL3>, used in transport and packaging, traded at $2,181 a tonne from $2,255 a tonne on Friday and zinc <CMZN3> at $2,171 a tonne from $2,282. Earlier zinc hit $2,168, a level not seen since late Feb.
    Zinc prices are under pressure from rising stocks, which at 559,475 tonnes are the highest since August 2005.
    "A 7,750 tonne jump in on-warrant zinc stocks has provided an additional drag on sentiment. Ordinarily the inflow of zinc would have little effect on prices. However, against the weaker backdrop and the Chinese developments, zinc has come under additional pressure," Standard Bank said in a note.
    Battery material lead <CMPB3> was at $2,120 a tonne from $2,230 on Friday, having earlier hit $2,118, its lowest since late March.
    Tin <CMSN3> was at $17,900 a tonne from $18,200 and stainless material nickel <CMNI3> at $25,440 from $26,300.
    "There is a wider expectation of nickel pig iron supply possibly being more than 180,000 tonnes this year," Societe Generale''s Wilson said. "It will still be a tight market, but I think we''ve seen the highs."
    Nickel hit $27,595 a tonne in April -- the highest since May last year.
    Metal Prices at 1214 GMT
 Metal            Last      Change  Pct Move   End 2009   Ytd Pct
 LME Alum      2195.00      -60.00     -2.66    2230.00     -1.57
 LME Cu        7190.00     -240.00     -3.23    7375.00     -2.51
 LME Lead      2146.00      -84.00     -3.77    2432.00    -11.76
 LME Nickel   25625.00     -675.00     -2.57   18525.00     38.33
 LME Tin      17950.00     -250.00     -1.37   16950.00      5.90
 LME Zinc      2199.00      -83.00     -3.64    2560.00    -14.10
 SHFE Alu     16085.00     -125.00     -0.77   17160.00     -6.26
 SHFE Cu*     58080.00     -570.00     -0.97   59900.00     -3.04
 SHFE Zin     18060.00     -305.00     -1.66   21195.00    -14.79
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
Tuesday, 04 May 2010 21:52:15

UPDATE 1-Alcoa sees mixed aluminum markets, stock down

Date May 05 2010 13:54:26 Source:Reuters
   * Forcasts aluminum market for autos improving in 2010
   * Sees decline in aerospace, building/construction markets
   * Stock drops over 4 percent
   NEW YORK, May 4 (Reuters) - Auto industry demand for aluminum is expected to improve this year, but the aerospace, construction and gas turbine markets for the metal will decline, Alcoa Inc <AA.N> said on Tuesday.
   America''s largest aluminum producer also expects global consumption of the metal, especially by China, to increase in 2010.
   Alcoa''s stock fell 4.4 percent to $12.56 in early trading on the New York Stock Exchange as the broad market also fell.
   The forecasts were included in an Alcoa filing with the Securities and Exchange Commission dealing mostly with the aluminum producer''s sustainability policies.
   "In 2010, we expect market conditions for aluminum products in certain end markets, particularly automotive and commercial transportation, to improve," the company said in the filing.
   "Other markets, including aerospace, building and construction, and industrial gas turbines, are expected to decline."
   Alcoa told the SEC it projects an increase in the consumption of aluminum, especially in China. But increases in energy prices and continued currency movements are expected to be a challenge.
   Chairman and Chief Executive Officer Klaus Kleinfeld noted 2009 was a challenging economic environment, with aluminum prices crashing, broad demand destruction and a credit crunch "that crippled our ability to initiate growth.
   "We adopted a holistic response to this situation by initiating various actions...aimed at reducing costs, improving cash levels, and preserving liquidity."
   Those actions included curtailing additional refinery and smelter capacity, which necessitated layoffs; identifying procurement efficiencies; reducing the quarterly dividend and issuing new equity and debt instruments.   
Tuesday, 04 May 2010 21:49:22

Zinc, lead hit multi-mth lows on China jitters, dlr

Date May 05 2010 13:53:42 Source:Reuters
LONDON, May 4 (Reuters) - Zinc and lead hit multi-month lows on Tuesday, falling nearly 5 percent as the dollar rose against the euro and the market fretted about monetary tightening in China, the world''s largest consumer of industrial metals. 
   Benchmark zinc <MZN3> on the London Metal Exchange was trading at $2,170 a tonne at 1259 GMT compared with $2,282 at the close on Friday, having earlier hit $2,169, a level not seen since late Feb.      
   Benchmark lead <MPB3> was trading at $2,130 a tonne  compared with $2,230, having earlier hit $2,129.75, its lowest since late March. 
 Tuesday, 04 May 2010 20:55:50

Gold breaks through $1,190/oz on sovereign risk fears

Date May 05 2010 13:53:07 Source:SHMET
LONDON, May 4 (Reuters) - Gold broke through $1,190 an ounce for the first time since early December on Thursday as fears Greece''s sovereign debt problems could spread to other euro zone economies fuelled a cross-currency rally in the precious metal.
   Gold priced in euros <XAUEUR=R>, sterling <XAUGBP=R> and Swiss francs <XAUCHF=R> also hit record highs as investors bought the metal as a haven from risk.
   Spot gold <XAU=> hit a high of $1,191.90 an ounce, its strongest level since Dec. 4, and was bid at $1,191.10 an ounce at 1255 GMT against $1,181.40 late in New York on Monday.
Tuesday, 04 May 2010 20:49:51

Silver fixes higher, gold hits 5-month highs

Date May 05 2010 13:52:30 Source:Reuters
 * Silver fixes at 1,871 U.S. cents, above its previous fix of 1,862 cents.
 * Spot silver <XAG=> bid at $18.68 an ounce at 1110 GMT against $18.77 late in New York on Monday.
 * Forward rates on Reuters pages <SIFO> indicated at 0.49, 0.52, 0.53, 0.54 and 0.58 percent for one, two, three, six and 12 months respectively.
 * Gold <XAU=> bid at $1,186.85 an ounce against $1,181.40.
 * Bullion hits five-month highs and record peaks in euro, sterling and Swiss franc terms as doubts over the effectiveness of a Greek bailout and fears of contagion to other euro zone economies prompt haven buying of the metal. 
 * Platinum <XPT=> bid at $1,711 an ounce against $1,720.
 * Palladium <XPD=> bid at $534.50 an ounce against $539.
Tuesday, 04 May 2010 19:27:07