News

METALS-Copper at 1-wk high on lower stocks, econ outlook

Date Mar 18 2010 15:17:08 Source:Reuters
    * Eyes on traditionally strong second quarter
    * LME copper stocks down 26,750 tonnes since March 1
    * Coming up: Fed Chairman Ben Bernanke speaks at 1800 GMT
   (Recasts with New York closing copper price, adds analyst comments, adds NEW YORK dateline/byline)
   
    By Chris Kelly and Pratima Desai
    NEW YORK/LONDON, March 17 (Reuters) - Copper maintained momentum near one-week highs late Wednesday, buoyed by falling inventories, talk of a Chinese yuan revaluation and improved economic sentiment from a U.S. Federal Reserve pledge to keep interest rates low for some time.
    Copper for May delivery <HGK0> on the New York Mercantile Exchange''s COMEX division jumped 5.30 cents, or 1.6 percent, to settle at $3.4180 per lb, after dealing in a session range between $3.3715 and $3.4360, its loftiest level since March 10.
    In after-hours trade, prices of the metal used in power and construction were trading above $3.42.
    On the London Metal Exchange, benchmark copper <CMCU3> hit a one-week high of $7,547.25 a tonne, before closing at $7,534 a tonne in rings from $7,400 on Tuesday. After the close, copper climbed to $7,550.50.
    Follow-through momentum from the U.S. Federal Reserve''s pledge late Tuesday to keep interest rates near zero for an extended period powered copper prices higher, analysts said. [ID:nN16251615]
    "The general belief now is we are emerging from recession and that there are brighter days ahead. I think that''s the general theme in commodities right now, and copper is a prime benefactor of that," said Michael Gross, futures analyst with
Optionsellers.com in Tampa, Florida.    
    Robin Bhar, an analyst at Credit Agricole, said lower rates will help stimulate growth in the United States, which should help feed into demand for metals.
    Stocks of copper in LME warehouses are down 26,750 tonnes since March 1 to a two-month low of 525,575 tonnes.
<0#LME-STOCKS>
    They are expected to fall further in the second quarter, traditionally the strongest for metals demand.
    "It''s been a good downtrend," Bhar said.
    "Twelve months ago we were in the midst of the downturn. Twelve months on all of that''s history," he said. "China''s growing quickly and we are expecting growth elsewhere to pick up. We''re all set for a reasonably strong Q2."
   
    YUAN REVALUATION?
    China repeated its commitment to a stable exchange rate after the U.S. Congress threatened to levy duties on some Chinese exports unless it revalues its currency. [ID:nTOE62G01Z]
    However, some analysts think there is a chance China will allow the yuan to rise against the dollar.
    "The underlying message is the yuan will be revalued in some form," said John Meyer, analyst at investment bank Fairfax. "That would be good for metals because China is such a major buyer ... a revaluation makes metals look cheaper in China."
    China is the world''s largest consumer of copper. It is also the largest consumer and producer of aluminum.
    Aluminum <CMAL3>, used in transport and packaging, hit a two-month high of $2,303 a tonne. It closed at $2,295 a tonne from $2,258 on Tuesday.
    The metal has been supported by financing deals, said to have tied up about 70 percent of LME stocks, to release cash for producers and earn high returns for banks. [ID:nLDE62726C]
    Sentiment has also been reinforced by a rise in canceled warrants -- material tagged for delivery -- on LME stocks.
    Aluminum canceled warrants stand at 6.7 percent of total stocks at 4,546,025 -- nearly 95,000 tonnes below the record high above 4.64 million tonnes hit on Jan. 21.
    Zinc <CMZN3>, used to galvanize steel, was at $2,345 a tonne from $2,307 and battery material lead <CMPB3> traded at $2,255 a tonne from $2,220.
    Tin <CMSN3> traded at $17,750 a tonne from Tuesday''s last bid at $17,550 and stainless steel ingredient nickel <CMNI3> was at $22,250 from $21,875.
   
 Metal Prices at 2:25 p.m. EDT (1825 GMT)
 
 Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                             move
 COMEX Cu       341.00        5.30     +1.58     334.65      1.90
 LME Alum      2295.00       37.00     +1.64    2230.00      2.91
 LME Cu        7540.00      140.00     +1.89    7375.00      2.24
 LME Lead      2265.00       45.00     +2.03    2432.00     -6.87
 LME Nickel   22300.00      800.00     +3.72   18525.00     20.38
 LME Tin      17775.00      225.00     +1.28   16950.00      4.87
 LME Zinc      2350.00       43.00     +1.86    2560.00     -8.20
 SHFE Alu     16820.00      125.00     +0.75   17160.00     -1.98
 SHFE Cu*     60140.00     1340.00     +2.28   59900.00      0.40
 SHFE Zin     18995.00      340.00     +1.82   21195.00    -10.38
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
Thursday, 18 March 2010 02:56:31

US copper ends at 2-week high on economic outlook

Date Mar 18 2010 15:14:01 Source:Reuters
NEW YORK, March 17 (Reuters) - U.S. copper futures closed up at a two-week high on Wednesday, as the dollar slipped and economic sentiment improved on the heels of a renewed pledge from the Federal Reserve to keep rates low for an extended period.
   
    * Copper for May delivery <HGK0> jumped 5.30 cents, or 1.6 percent, to settle at $3.4180 per lb on the New York Mercantile Exchange''s COMEX division.
    * Highest level on a closing basis since March 3.
    * Range from $3.3715 to $3.4360.
    * COMEX estimated copper futures volume at 23,722 lots by 1 p.m. EDT (1700 GMT). Final volume on Tuesday hit 30,998 lots.
    * Open interest up 1,710 lots at 130,126 contracts open as of March 16.
    * Copper up in extension of positive reaction to FOMC statement on Tuesday - Michael Gross, futures analyst with Optionsellers.com in Tampa, Florida.
    * Copper a prime benefactor of the general belief that economy is emerging from recession - Gross.
    * The U.S. Federal Reserve pledged to keep interest rates near zero for an "extended period" and gave a more optimistic view of the labor market. [ID:nLDE62G02L]
    * Copper gains buck data showing larger-than-expected fall in U.S. producer prices in February, which helped the dollar recover earlier losses against the euro. [ID:nN17150095] [USD/]
    * London Metal Exchange copper warehouse stocks are down 26,750 tonnes since March 1, to a 2-month low at 525,575 tonnes. <0#LME-STOCKS>
    * COMEX copper stocks down 263 at 101,875 short tons as of Tuesday. <CMWSU>
    * Global copper market in a 86,900-tonne surplus in January - the World Bureau of Metal Statistics (WMBS). [ID:nLDE62G1TK]
    * Copper supported by lingering supply concerns in top-producer Chile after 6.7 aftershock struck off the coast Monday night. [ID:nN15226125]
[ID:nN15159474]
    * Kazakhstan''s annual copper cathode output expected to grow by 95,000 tonnes, or nearly 24 percent, within five years from 400,000 tonnes now - Industry Minister Aset Isekeshev. [ID:nLDE62G039]
    * LME copper <CMCU3> closed at $7,534 per tonne from prior kerb close at $7,400 per tonne.
 Thursday, 18 March 2010 01:58:09

METALS INSIDER-Is copper just pausing for breath, or?

Date Mar 18 2010 15:12:26 Source:Reuters
 Andy Home is a Reuters columnist. The opinions expressed are his own. For more Metals Insider columns, top Reuters metals stories and third party content, please visit the free Base Metals Community website at (www.metalsinsider.com) --
   
   By Andy Home
   LONDON, March 17 (Reuters) - Falling LME stocks, strong Chinese imports and an earthquake in Chile (with aftershocks and power problems). It seems like the perfect bull cocktail for copper to extend last year''s super-charged rally.
    Yet the red metal has done no more than hold its ground around the $7,500 per tonne level, still short of this year''s early-January high of $7,796.
   As of Tuesday''s close at $7,405 per tonne, three-month copper''s year-to-date gains stood at a humble $30, or just 0.4 percent. It''s a paltry return from a market that rose by 140 percent over the course of 2009.
   Is the market just pausing for breath ahead of the seasonally strong second quarter or is the conspicuous lack of upside momentum a harbinger of something more serious?
   Depending on the answer, copper could be heading back to the 2008 highs up near $9,000 per tonne or facing a sell-off that could send it spiralling back down to the February lows near $6,000.
   
    END OF THE RECOVERY TRADE?
   It seems incongruous that Dr. Copper, so-called because of the red metal''s reputed ability to act as a bellwether for global manufacturing, has lost his way just as signs of manufacturing recovery proliferate.
   Perhaps even more incongruous is the dissipation of the recovery trade that propelled copper on its stellar ascent last year.
   The tsunami of investment money that flowed into copper, and other hard commodity assets, seems to have lessened to no more than a ripple.
   Barclays Capital, which tracks such investment flows, estimates that net inflows of institutional money into the commodities sector dropped to just $139 million in January, a whopping $5 billion off the pace of December.
   Inflows reaccelerated to $3,98 billion in February but that was an even bigger $8.7 billion lower than the equivalent year-earlier figure.
   This sharp year-on-year drop may overly reflect changes in funds'' favoured sectors such as energy and precious metals but within the industrial metals copper is also a fund favourite and it has indubitably been affected by the lessening of the investment appetite.
   This should prove to be no more than a breathing space since a Barclays survey of investors at its Sixth Annual Commodity Investor Conference showed that 64 percent of respondents expect commodity inflows this year to exceed last year''s record $70 billion. [ID:nLDE6281IR]
   And guess which commodity came out second in expected performance this year? Copper, with 16 percent of the vote, behind PGMs (platinum and palladium) with 23 percent.
   What, one might ask, are all these latent copper bulls waiting for?
   
   END OF THE RECOVERY?
   Could it be that they are waiting for manufacturing recovery outside of China to be reflected in micro indicators, particularly visible copper stocks?
   LME-registered copper stocks have undoubtedly topped out for now. Inflows have dropped several gears and outflows have accelerated since the start of this month.
   LME-registered copper inventory is now 525,575 tonnes, down by 26,750 tonnes since the start of the month. It''s the first major month-on-month drop since June of last year.
   Bullish, right?
   Well, only partly so. While LME stocks have been falling this month, those registered with the Shanghai Futures Exchange have been rising, to the tune of 6,000 tonnes so far this month.
   This may simply reflect distorted manufacturing activity around the Lunar New Year holidays and as such rising Shanghai inventory may prove to be a very temporary phenomenon. But while the trend lasts, it creates the impression that surplus metal is merely being relocated rather than consumed.
   That said, the copper market can afford to be sanguine about what is a relatively small rise in visible Chinese inventory when the country continues to suck in 200,000 tonnes and more each month in refined copper.
   It''s what''s happening to stocks outside of China that is cause for more serious concern. Again, superficially things look OK.
   This graphic shows the ratio of cancelled tonnage in LME warehouses since the start of the year. http://graphics.thomsonreuters.com/310/CMD_CWRT0310.jpg
   Cancelled warrant trends are important since metal must be cancelled before it can be taken out of LME warehouse for physical delivery. As such, cancelled tonnage is the best tool available for extrapolating future "out" rates from the LME system.
   The trend this year looks positive. Moreover, the market has been quick to note that cancellations, and drawdowns, have not been confined to China-friendly locations such as South Korea and Singapore.
   Of the 21,600 tonnes currently sitting in the cancelled category the largest part, 11,875 tonnes, is located at European locations. The second largest tranche, 5,850 tonnes, is located at U.S. locations.
   However, this second graphic, showing exactly the same information but with data going back to the beginning of last year, shows the current trend in a starkly different light. http://graphics.thomsonreuters.com/310/CMD_CWR0310.jpg
   Looked at this way, LME cancellations and draws look anaemic relative to this time last year, when manufacturing outside of China was still universally bombed out and commentators were only just starting the search for those famous "green shoots of recovery."
   As of now, this is not the sort of full-blooded restocking recovery the bulls have been expecting and which the copper price is arguably already pricing in.
   Hence the lengthening pause in copper''s upside progress.
   Look again at the second graphic and you''ll see that the spike in cancellation activity in February/March 2009 was eclipsed by the second one in April/May, the core restocking period for the copper market.
   The many bulls will be hoping that the same pattern repeats itself this year, or indeed at an amplified level, given the expected restocking impetus of a recovering manufacturing sector.
   It''s just that it''s not happening yet.
   So, if you want to work out whether copper''s poised to leap higher or slump lower, keep watching that ratio of cancelled tonnage. It''s a micro indicator with macro implications.
Thursday, 18 March 2010 01:52:26

World copper market in 87,000 T surplus in Jan-WBMS

Date Mar 18 2010 14:36:14 Source:Reuters

LONDON, March 17 (Reuters) - The global copper market recorded an 86,900 tonne surplus in January, the World Bureau of Metal Statistics (WMBS) said on Wednesday.
   "In January 2010, refined copper production was 1613.0 kt and consumption was 1526.1 kt", the British-based consultancy said in its monthly report.
   World copper mine production in January was 1.29 million tonnes, 2.6 percent higher than in the same month last year.
   The market was in a 246,500 tonne surplus in the whole of last year, WBMS said.
   Reported copper stocks in January were 51,000 tonnes higher than in December 2009.
   WBMS puts Chinese apparent consumption in January at 591,000 tonnes, up from 482,000 tonnes in January 2009.
   The group said it makes no allowance in its consumption calculation for unreported stock changes, particularly in the Chinese government stockpile.
   The global aluminium market was in a 156,000 tonne surplus in January, down from 309,000 tonnes in the same month last year. In 2009, primary aluminium production outpaced consumption by 580,000 tonnes.
   WBMS said the zinc market was in surplus by 119,000 tonnes in January 2010, compared with a 386,000 tonne surplus for the whole of 2009.
   The lead market was in a 5,000 tonne deficit in January, with surpluses of 15,500 tonnes and 500 tonnes for nickel and tin respectively, according to WBMS.
Thursday, 18 March 2010 00:58:46

Gold steadies as euro slips versus the dollar

Date Mar 18 2010 14:29:26 Source:Reuters
 * Gold <XAU=> bid at $1,123.85 an ounce at 1615 GMT against $1,124.70 late in New York on Tuesday.
 * Bullion steadies as the euro slips 0.1 percent against the dollar, giving up gains that took it to its highest in over a week earlier the session at $1,132.80 an ounce.
 * Silver <XAG=> bid at $17.42 an ounce against $17.40.
 * Platinum <XPT=> bid at $1,628 an ounce versus $1,633.50.
 * Palladium <XPD=> bid at $471.50 an ounce against $470.
  Thursday, 18 March 2010 00:48:07