METALS-Copper Firmer, Green Shoots Appear for Demand-Shanghai Metals Market

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METALS-Copper Firmer, Green Shoots Appear for Demand

Industry News 09:41:27AM Mar 26, 2010 Source:SMM

NEW YORK/LONDON, March 25 (Reuters) - Copper prices maintained a positive tone in late business on Thursday, with upbeat labor market data in the United States and indications of brighter demand prospects outweighing lingering concerns about sovereign debt in the euro zone.

Copper for May delivery HGK0 on the New York Mercantile Exchange's COMEX division ended up 3.50 cents at $3.3805 per lb, near the upper end of its $3.3205 to $3.3870 session range.

On the London Metal Exchange, benchmark copper for three-months delivery CMCU3 closed at $7,435 a tonne in official rings from a close of $7,375 on Wednesday.

Adam Klopfenstein, Senior Market Strategist, with Lind-Waldock said copper shot up in tandem with equities in response to the positive U.S. jobs data and favorable testimony from U.S. Federal Reserve Chairman Ben Bernanke.

Testifying before the U.S. House of Representatives Financial Services Committee, Bernanke said a modest recovery in the U.S. economy still warranted the Fed's ultra-low interest rate policy.

"Bernanke reiterated his plan to keep rates lower to aid the economy. I think any time you hear that type of news, it lends more support to commodities in terms of the possible inflation fears that could arise from leaving rates low for too long," he said.

Pointing to a pick-up in demand, copper stocks at LME warehouses have fallen throughout March, dropping 1,625 tonnes to 518,825 tonnes on Thursday. This puts inventories 36,250 tonnes below a 2010 peak of 555,075 tonnes hit in February, which was the highest since late 2003.

"It's a good indicator, that copper stocks are down," said Marc Elliott, an analyst at investment bank Fairfax, adding that demand would likely be picking up in a traditionally better period for construction.

"Chinese demand and industrial activity should be pretty good at this time of year. This is normally a good time."

Investors are also watching a Commodity Futures Trading Commission hearing aimed at limiting speculation in metals markets.

Also, trade was still concerned about the fiscal health of the euro zone, and eyed an EU summit for signs of aid for Athens.

"Stage one was Greece, stage two now is Portugal. Now people are scratching their heads wondering what stage three is going to be," Klopfenstein said.

STRIKES LOOM
On the supply side, workers at the Cerro Verde (CVE.LM) copper mine, one of Peru's largest copper pits, and Shougang Hierro Peru (SHP.LM) iron mine will go on strike next week to demand better wages.

"This is very minor compared to Chile's earthquake. In addition, the focus of the market these days is not supply but demand. The supply surplus from 2009 is extending into this year," said Peng Qiang, an analyst at COFCO Futures.

Among other industrial metals, stainless steel ingredient nickel CMNI3 closed at $22,825 from $22,275. Nickel looks set to remain the top performer this year because of a strike in Canada and problems bringing the New Caledonia Goro mine into production coupled with a pick-up in demand from the stainless sectors.

Speculators have jumped on the nickel bandwagon in recent weeks, with LME data showing a dominant position controlling between 50-80 percent of cash warrants. [LME/WC] The discount between the cash and three-month contract MNI0-3, at $36 a tonne, is more than half $83 on March 1.

Battery material lead CMPB3 was at $2,077 from $2,026, with LME data showing lead stock rose 400 tonnes to 172,000, their highest since 2003.

Aluminum MAL3, used in transport and packaging, was at $2,222 from $2,224, zinc MZN3 was at $2,245 from $2,211, while tin MSN3 was at $17,600 from $17,500.
 

METALS-Copper Firmer, Green Shoots Appear for Demand

Industry News 09:41:27AM Mar 26, 2010 Source:SMM

NEW YORK/LONDON, March 25 (Reuters) - Copper prices maintained a positive tone in late business on Thursday, with upbeat labor market data in the United States and indications of brighter demand prospects outweighing lingering concerns about sovereign debt in the euro zone.

Copper for May delivery HGK0 on the New York Mercantile Exchange's COMEX division ended up 3.50 cents at $3.3805 per lb, near the upper end of its $3.3205 to $3.3870 session range.

On the London Metal Exchange, benchmark copper for three-months delivery CMCU3 closed at $7,435 a tonne in official rings from a close of $7,375 on Wednesday.

Adam Klopfenstein, Senior Market Strategist, with Lind-Waldock said copper shot up in tandem with equities in response to the positive U.S. jobs data and favorable testimony from U.S. Federal Reserve Chairman Ben Bernanke.

Testifying before the U.S. House of Representatives Financial Services Committee, Bernanke said a modest recovery in the U.S. economy still warranted the Fed's ultra-low interest rate policy.

"Bernanke reiterated his plan to keep rates lower to aid the economy. I think any time you hear that type of news, it lends more support to commodities in terms of the possible inflation fears that could arise from leaving rates low for too long," he said.

Pointing to a pick-up in demand, copper stocks at LME warehouses have fallen throughout March, dropping 1,625 tonnes to 518,825 tonnes on Thursday. This puts inventories 36,250 tonnes below a 2010 peak of 555,075 tonnes hit in February, which was the highest since late 2003.

"It's a good indicator, that copper stocks are down," said Marc Elliott, an analyst at investment bank Fairfax, adding that demand would likely be picking up in a traditionally better period for construction.

"Chinese demand and industrial activity should be pretty good at this time of year. This is normally a good time."

Investors are also watching a Commodity Futures Trading Commission hearing aimed at limiting speculation in metals markets.

Also, trade was still concerned about the fiscal health of the euro zone, and eyed an EU summit for signs of aid for Athens.

"Stage one was Greece, stage two now is Portugal. Now people are scratching their heads wondering what stage three is going to be," Klopfenstein said.

STRIKES LOOM
On the supply side, workers at the Cerro Verde (CVE.LM) copper mine, one of Peru's largest copper pits, and Shougang Hierro Peru (SHP.LM) iron mine will go on strike next week to demand better wages.

"This is very minor compared to Chile's earthquake. In addition, the focus of the market these days is not supply but demand. The supply surplus from 2009 is extending into this year," said Peng Qiang, an analyst at COFCO Futures.

Among other industrial metals, stainless steel ingredient nickel CMNI3 closed at $22,825 from $22,275. Nickel looks set to remain the top performer this year because of a strike in Canada and problems bringing the New Caledonia Goro mine into production coupled with a pick-up in demand from the stainless sectors.

Speculators have jumped on the nickel bandwagon in recent weeks, with LME data showing a dominant position controlling between 50-80 percent of cash warrants. [LME/WC] The discount between the cash and three-month contract MNI0-3, at $36 a tonne, is more than half $83 on March 1.

Battery material lead CMPB3 was at $2,077 from $2,026, with LME data showing lead stock rose 400 tonnes to 172,000, their highest since 2003.

Aluminum MAL3, used in transport and packaging, was at $2,222 from $2,224, zinc MZN3 was at $2,245 from $2,211, while tin MSN3 was at $17,600 from $17,500.