Copper Rises after Four-Day Slide, Fragile Gains-Shanghai Metals Market

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Copper Rises after Four-Day Slide, Fragile Gains

Industry News 09:54:04AM May 17, 2012 Source:SMM

SINGAPORE, May 17 (Reuters) - London copper edged higher for the first time in five sessions on Thursday with a firmer euro aiding its bounce from four-month lows in the previous session amid a deepening debt crisis in Europe exacerbated by political instability in Greece. 

The modest gains in copper suggests many investors are wary of bidding up prices aggressively given the contagion potential of a euro zone without Greece, a slowdown in top copper consumer China and the fragile state of the U.S. economy. 

Fundamentals
Three-month copper on the London Metal Exchange gained 0.8 percent to $7,716 a tonne by 0105 GMT, after falling to a session low of $7,625 on Wednesday, its weakest since Jan. 10. 
The most-traded August copper contract on the Shanghai Futures Exchange rose 1.2 percent to 55,360 yuan ($8,800) a tonne, having slid to a 2012 low of 54,660 yuan in the prior session. 
The European Central Bank has stopped providing liquidity to some Greek banks which have not been successfully recapitalised, highlighting the weak state of the banking sector in the debt-laden country.  

The World Bank said a decision by Greece to leave Europe's common currency zone would raise big questions about the impact on Spain, Italy and other euro zone countries with big debt loads that are undergoing structural reforms. The International Monetary Fund warned of "extremely expensive" consequences not just for Greece if the country were exit the currency bloc.
   
"At this point, the nervous tone still evident in the markets are telling us that the Europeans need to embark on a series of stabilization initiatives, including ones that could buffet the systems from the shock of a likely Greek exit from the euro," INTL FCStone analyst Edward Meir said in a note. 

"Simply waiting for the results of the June 17th Greek elections may be too late and risks widening the contagion into Spain and Italy," Meir said. 

Several Federal Reserve policymakers last month thought the U.S. central bank might need to do more to support the economy if the recovery stumbles, reviving the possibility of a third round of quantitative easing that would boost liquidity in markets and prod investors to bet on risk assets.
 
Market News 
Asian shares steadied on Thursday from the previous day's sell-off, but investors found no reason to bet on risk amid deepening turmoil in Greece and fears of contagion to other stressed euro zone economies.  

The euro regained some ground versus the dollar on Thursday after falling to a four-month trough after some banks in Athens faced emergency funding needs.  
       
    DATA/EVENTS (GMT) 
    0430  Japan     Industrial output rev    Mar      
    0700  Spain     Q1 GDP   
    1230  U.S.      Jobless claims           Weekly      
    1230  U.S. Treasury Secretary Geithner speaks 
    1400  U.S.      Leading indicators       April  
    1400  U.S. Philadelphia Fed business activity index for May 
    1430  U.S.      EIA natural gas stocks   Weekly
         
  Base metals prices at 0105 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7716.00     61.00     +0.80      1.53
  SHFE CU FUT AUG2    55360       670     +1.23      0.00
  HG COPPER JUL2     349.80      2.00     +0.58      1.80
  LME Alum          2040.00      5.00     +0.25      0.99
  SHFE AL FUT AUG2    16010       110     +0.69      1.04
  LME Zinc          1912.25     14.25     +0.75      3.64
  SHFE ZN FUT AUG2    14965       105     +0.71      1.15
  LME Nickel       17000.00     -5.00     -0.03     -9.14
  LME Lead          1976.00      5.00     +0.25     -2.90
  SHFE PB FUT      15290.00     35.00     +0.23      0.03
  LME Tin          19600.00    -75.00     -0.38      2.08
  LME/Shanghai arb^    1708
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
 ($1 = 6.3222 Chinese yuan) 
 

Copper Rises after Four-Day Slide, Fragile Gains

Industry News 09:54:04AM May 17, 2012 Source:SMM

SINGAPORE, May 17 (Reuters) - London copper edged higher for the first time in five sessions on Thursday with a firmer euro aiding its bounce from four-month lows in the previous session amid a deepening debt crisis in Europe exacerbated by political instability in Greece. 

The modest gains in copper suggests many investors are wary of bidding up prices aggressively given the contagion potential of a euro zone without Greece, a slowdown in top copper consumer China and the fragile state of the U.S. economy. 

Fundamentals
Three-month copper on the London Metal Exchange gained 0.8 percent to $7,716 a tonne by 0105 GMT, after falling to a session low of $7,625 on Wednesday, its weakest since Jan. 10. 
The most-traded August copper contract on the Shanghai Futures Exchange rose 1.2 percent to 55,360 yuan ($8,800) a tonne, having slid to a 2012 low of 54,660 yuan in the prior session. 
The European Central Bank has stopped providing liquidity to some Greek banks which have not been successfully recapitalised, highlighting the weak state of the banking sector in the debt-laden country.  

The World Bank said a decision by Greece to leave Europe's common currency zone would raise big questions about the impact on Spain, Italy and other euro zone countries with big debt loads that are undergoing structural reforms. The International Monetary Fund warned of "extremely expensive" consequences not just for Greece if the country were exit the currency bloc.
   
"At this point, the nervous tone still evident in the markets are telling us that the Europeans need to embark on a series of stabilization initiatives, including ones that could buffet the systems from the shock of a likely Greek exit from the euro," INTL FCStone analyst Edward Meir said in a note. 

"Simply waiting for the results of the June 17th Greek elections may be too late and risks widening the contagion into Spain and Italy," Meir said. 

Several Federal Reserve policymakers last month thought the U.S. central bank might need to do more to support the economy if the recovery stumbles, reviving the possibility of a third round of quantitative easing that would boost liquidity in markets and prod investors to bet on risk assets.
 
Market News 
Asian shares steadied on Thursday from the previous day's sell-off, but investors found no reason to bet on risk amid deepening turmoil in Greece and fears of contagion to other stressed euro zone economies.  

The euro regained some ground versus the dollar on Thursday after falling to a four-month trough after some banks in Athens faced emergency funding needs.  
       
    DATA/EVENTS (GMT) 
    0430  Japan     Industrial output rev    Mar      
    0700  Spain     Q1 GDP   
    1230  U.S.      Jobless claims           Weekly      
    1230  U.S. Treasury Secretary Geithner speaks 
    1400  U.S.      Leading indicators       April  
    1400  U.S. Philadelphia Fed business activity index for May 
    1430  U.S.      EIA natural gas stocks   Weekly
         
  Base metals prices at 0105 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7716.00     61.00     +0.80      1.53
  SHFE CU FUT AUG2    55360       670     +1.23      0.00
  HG COPPER JUL2     349.80      2.00     +0.58      1.80
  LME Alum          2040.00      5.00     +0.25      0.99
  SHFE AL FUT AUG2    16010       110     +0.69      1.04
  LME Zinc          1912.25     14.25     +0.75      3.64
  SHFE ZN FUT AUG2    14965       105     +0.71      1.15
  LME Nickel       17000.00     -5.00     -0.03     -9.14
  LME Lead          1976.00      5.00     +0.25     -2.90
  SHFE PB FUT      15290.00     35.00     +0.23      0.03
  LME Tin          19600.00    -75.00     -0.38      2.08
  LME/Shanghai arb^    1708
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
 ($1 = 6.3222 Chinese yuan)