Copper Erases Week's Gain On Greece, China Worry

Industry News 08:44:07AM Feb 13, 2012 Source:SMM

Feb 10, 2012 NEW YORK (Dow Jones)--Copper futures fell Friday, erasing the gains made earlier in the week as fresh worries about debt-laden Greece and the health of China's economy sent traders cashing out of the industrial metal.

The most-actively traded copper contract, for March delivery, fell 11.65 cents, or 2.9%, to settle at $3.862 a pound on the Comex division of the New York Mercantile Exchange. During the week, futures fell 1%.

Euro-zone finance ministers have withheld approval for Greece's latest bailout, demanding proof that the country's political leaders would deliver on their commitments to international creditors. Worries that the Greek government could fail to approve new budget-cutting measures and send the country into a default sent growth-sensitive assets lower.

U.S. stocks, crude oil and metals all fell. Investors moved to the perceived safety of the U.S. dollar, sending the currency higher against the euro. A stronger dollar can weigh on dollar-denominated copper by making the futures appear more expensive for buyers using other currencies.

On Thursday, copper futures settled at the highest price since mid-September, and some of Friday's losses came as some traders closed out profitable positions in the metal, market participants said.

"You punched in a new high...and you're seeing profit-taking," said Charles Nedoss, senior market strategist with Olympus Futures.

The copper market was also under pressure from a drop in imports to China, which accounts for about 40% of world consumption of the metal.

China's copper imports in January totaled 413,964 metric tons in January, down 19% from the record-high level in December, but up 14% from the same month of 2011. The decline snapped a seven-month streak of rising copper imports, and was partially the result of the pause in manufacturing activity during the month for the Lunar New Year holiday.

"Weakening signals in the domestic market and the closure of the arbitrage window in 2012 suggest China has not been the predominant buyer [of copper] this year," said Kate Tang, an analyst with Barclays Capital.

What is known as an arbitrage window opens when domestic copper prices in China are higher than international benchmarks, making it profitable to import more metal. So far this year, Chinese prices have held below levels on the London Metal Exchange.

CME Group Inc. (CME), owner of the Nymex, said in an email late Thursday that it would cut the amount of money investors must post to trade its copper contract. The margin required to open a copper futures contract will fall 13%, effective at the close of business on Monday, the exchange operator said.

Copper settlements (ranges include electronic and pit trading):
Mar $3.8620; down 11.65 cents; Range $3.8425-$3.9785
May $3.8680; down 11.60 cents; Range $3.8490-$3.9785

 

Key Words:  copper 

Copper Erases Week's Gain On Greece, China Worry

Industry News 08:44:07AM Feb 13, 2012 Source:SMM

Feb 10, 2012 NEW YORK (Dow Jones)--Copper futures fell Friday, erasing the gains made earlier in the week as fresh worries about debt-laden Greece and the health of China's economy sent traders cashing out of the industrial metal.

The most-actively traded copper contract, for March delivery, fell 11.65 cents, or 2.9%, to settle at $3.862 a pound on the Comex division of the New York Mercantile Exchange. During the week, futures fell 1%.

Euro-zone finance ministers have withheld approval for Greece's latest bailout, demanding proof that the country's political leaders would deliver on their commitments to international creditors. Worries that the Greek government could fail to approve new budget-cutting measures and send the country into a default sent growth-sensitive assets lower.

U.S. stocks, crude oil and metals all fell. Investors moved to the perceived safety of the U.S. dollar, sending the currency higher against the euro. A stronger dollar can weigh on dollar-denominated copper by making the futures appear more expensive for buyers using other currencies.

On Thursday, copper futures settled at the highest price since mid-September, and some of Friday's losses came as some traders closed out profitable positions in the metal, market participants said.

"You punched in a new high...and you're seeing profit-taking," said Charles Nedoss, senior market strategist with Olympus Futures.

The copper market was also under pressure from a drop in imports to China, which accounts for about 40% of world consumption of the metal.

China's copper imports in January totaled 413,964 metric tons in January, down 19% from the record-high level in December, but up 14% from the same month of 2011. The decline snapped a seven-month streak of rising copper imports, and was partially the result of the pause in manufacturing activity during the month for the Lunar New Year holiday.

"Weakening signals in the domestic market and the closure of the arbitrage window in 2012 suggest China has not been the predominant buyer [of copper] this year," said Kate Tang, an analyst with Barclays Capital.

What is known as an arbitrage window opens when domestic copper prices in China are higher than international benchmarks, making it profitable to import more metal. So far this year, Chinese prices have held below levels on the London Metal Exchange.

CME Group Inc. (CME), owner of the Nymex, said in an email late Thursday that it would cut the amount of money investors must post to trade its copper contract. The margin required to open a copper futures contract will fall 13%, effective at the close of business on Monday, the exchange operator said.

Copper settlements (ranges include electronic and pit trading):
Mar $3.8620; down 11.65 cents; Range $3.8425-$3.9785
May $3.8680; down 11.60 cents; Range $3.8490-$3.9785

 

Key Words:  copper