Metals News
METALS-LME Copper Gains, SHFE Steady; Eyes on Japan Smelters
industry news
Mar 22,2011

SINGAPORE, March 22 (Reuters) - Copper prices rallied in London on Tuesday, recouping some of the previous session's 1 percent loss, while Shanghai futures ticked up in light trade, after fresh news of disruption to copper smelting following the Japan earthquake. 

Three-month copper on the London Metal Exchange rose $60.50 to $9,465.50 a tonne by 0424 GMT, after ending down 1.2 percent on Monday. 

Imperial Metals Corp said some shipments from its copper mine may be delayed after three Japanese companies declared force majeure on shipments following damages to ports at a smelter after the earthquake in the Northeast Asian country.  

The Vancouver-based company said the force majeure declared by Mitsubishi  , Furukawa and Dowa  for the Onahama smelter had no immediate impact on shipments from its Huckleberry mine, which has a life-of-mine
contract with the companies. 

"This will partly offset the negative demand side. Markets have been very speculative since the quake -- buying and selling for no obvious reason," said Judy Zhu, analyst at Standard Chartered in Shanghai. 

We think that should stabilise. We are modestly bullish as Japan's manufacturing sector recovers, but we don't expect a sharp rally. At the end of the day investors still need to watch the situation in China." 

Shanghai's most-active copper futures contract, June rose 80 yuan to 71,560 yuan a tonne. 

"Markets are still a bit up in the air right now. Chinese consumers still think prices are too high and just don't want to buy in a big way," said a trader in Singapore. 

"Bullish speculators are getting a bit fed up too with the failure to push on to new highs. It's only the day traders who are happy when the market is like this. The earthquake, tsunami, attacks in Libya and Chinese tightening and lousy imports -- none of it broke the range." 

Copper ranked among the weaker performers in commodity markets on Monday. Worries about Chinese demand after weak, but well-telegraphed, import data from the world's top consumer, weighed on sentiment. 

China's February import of refined copper tumbled 35.6 percent from the previous month to a 27-month low because of holidays in the shortest month of the year and high stocks.
Zhu warned that high stockpiles -- she estimated 550,000 tonnes of metal in Shanghai bonded warehouses alone combined with China's monetary tightening policy -- would cap the market in the second quarter. 

"Going into the second half of the year, we expect prices to rise after China run down its stocks." 

Adding to the weaker mood was a drop in sales of previously owned homes in the United States. The National Association of Realtors said sales fell 9.6 percent, month over month, to an annual rate of 4.88 million units, snapping three-straight months of gains. Median prices hit a nine-year low. 

Technically copper was neutral, with the market balanced just above pivotal support at $9,398, said Reuters analyst Wang Tao. 

He said the market was biased to fall, with a breakdown seen as confirmation of a medium-term downtrend with an immediate
target at $9,185.  

The outlook for aluminium was also bearish, with a near-term target of $2,544, based on its wave pattern and a Fibonacci projection analysis. 

Aluminium traded at $2,572.75, up $2.75 after briefly rallying to $2,604 on Monday. 

Indonesia's PT Inalum expects its aluminium ingots production to fall 1 percent this year because of lower water levels at the hydro power plant that supplies electricity to its smelter, with output at smelter in North Sumatra pegged at 251,000 tonnes versus 253,271 tonnes in 2010.  




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