London Copper Slips on Spain Worries; Fed Hopes Limit Fall-Shanghai Metals Market

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London Copper Slips on Spain Worries; Fed Hopes Limit Fall

Industry News 03:13:58PM Jun 20, 2012 Source:SMM

SHANGHAI, June 20 (Reuters) - London copper slipped on Wednesday on worries over Spain's debt problems and as some investors cashed in on gains made the previous day, but talk of further stimulus by the U.S. Federal Reserve that could lift demand for industrial metals lent support.

 

The U.S. Federal Reserve concludes a two-day policy meeting later, with expectations high that the central bank will extend its bond-buying programme dubbed "Operation Twist" to shore up the economy.

 

Three-month copper on the London Metal Exchange was down 0.4 percent at $7,580 a tonne by 0507 GMT, after rising 1.3 percent on Tuesday. 

 

The most-active October copper contract on the Shanghai Futures Exchange climbed 0.8 percent to 55,090 yuan ($8,700) a tonne, catching up with previous gains in London.

 

"With Bernanke (Fed Reserve Chairman Ben Bernanke) speaking tonight, most investors will want to close off their positions by this afternoon, including the fresh longs which entered the market this morning," said Orient Futures Derivatives Director Andy Du.

 

The liquidity hit provided by previous doses of Fed stimulus has lifted riskier assets, and financial markets have become highly sensitive to expectations of further moves, with global equities and commodities tending to rise and the dollar coming under pressure when action is seen as increasingly likely.

 

"ShFE October copper contract price is also boosted by investors rolling over their September contracts. The investors involved are selling off their September contract and simultaneously buying the same volumes in October," he added.

 

A technical analysis of Shanghai copper suggest that it may end the current rebound either today or in the next trading session, as indicated by its wave pattern and a Fibonacci ratio analysis, said Reuters analyst Wang Tao.

 

Shanghai copper prices have climbed 5 percent since hitting an eight-month low in June. The recent drop in prices have encouraged some end-users to restock, in turn helping to draw down copper inventories held at exchange and bonded warehouses.

 

Still, analysts have cautioned that Chinese end-users were still buying on a hand-to-mouth basis amid an uncertain economic outlook and sluggish domestic demand.

 

Hopes of a Fed stimulus were also tempered by fears that Spain's debt crisis could spiral out of control, with its soaring borrowing costs showing that a euro zone deal to lend its bank up to 100 billion euros ($126 billion) had not solved its problems or restored investor confidence. It also suggests more aid may be needed to fix its finances.

 

In China, a group of senior advisers have called on the government to relax property market restrictions to shore up its slowing economy, a state-backed newspaper reported on Wednesday. Such a move will likely boost base metal demand from the real estate sector.

    

  Base metals prices at 0507 GMT

  Metal              Last       Change   Pct Move YTD pct chg

  LME Cu            7580.00    -29.00     -0.38     -0.26

  SHFE CU FUT OCT2    55090       420     +0.77     -0.49

  HG COPPER JUL2     342.55     -0.80     -0.23     -0.31

  LME Alum          1925.00     -0.50     -0.03     -4.70

  SHFE AL FUT OCT2    15710        25     +0.16     -0.85

  LME Zinc          1892.75     -6.25     -0.33      2.59

  SHFE ZN FUT SEP2    14895        35     +0.24      0.68

  LME Nickel       17076.00    -19.00     -0.11     -8.73

  LME Lead          1910.75     -1.75     -0.09     -6.11

  SHFE PB FUT      15060.00     65.00     +0.43     -1.47

  LME Tin          19600.00     70.00     +0.36      2.08

  LME/Shanghai arb^    1071

 

   Shanghai and COMEX contracts show most active months

   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month

 ($1 = 6.3545 Chinese yuan)

 

Price

more
#1 Refined Cu
May.24
47010.0
210.0
(0.45%)
Standard-Grade Copper
May.24
46990.0
215.0
(0.46%)
High-Grade Copper
May.24
47030.0
210.0
(0.45%)
Guixi copper
May.24
47040.0
210.0
(0.45%)
Low-quality copper
May.24
46920.0
220.0
(0.47%)

London Copper Slips on Spain Worries; Fed Hopes Limit Fall

Industry News 03:13:58PM Jun 20, 2012 Source:SMM

SHANGHAI, June 20 (Reuters) - London copper slipped on Wednesday on worries over Spain's debt problems and as some investors cashed in on gains made the previous day, but talk of further stimulus by the U.S. Federal Reserve that could lift demand for industrial metals lent support.

 

The U.S. Federal Reserve concludes a two-day policy meeting later, with expectations high that the central bank will extend its bond-buying programme dubbed "Operation Twist" to shore up the economy.

 

Three-month copper on the London Metal Exchange was down 0.4 percent at $7,580 a tonne by 0507 GMT, after rising 1.3 percent on Tuesday. 

 

The most-active October copper contract on the Shanghai Futures Exchange climbed 0.8 percent to 55,090 yuan ($8,700) a tonne, catching up with previous gains in London.

 

"With Bernanke (Fed Reserve Chairman Ben Bernanke) speaking tonight, most investors will want to close off their positions by this afternoon, including the fresh longs which entered the market this morning," said Orient Futures Derivatives Director Andy Du.

 

The liquidity hit provided by previous doses of Fed stimulus has lifted riskier assets, and financial markets have become highly sensitive to expectations of further moves, with global equities and commodities tending to rise and the dollar coming under pressure when action is seen as increasingly likely.

 

"ShFE October copper contract price is also boosted by investors rolling over their September contracts. The investors involved are selling off their September contract and simultaneously buying the same volumes in October," he added.

 

A technical analysis of Shanghai copper suggest that it may end the current rebound either today or in the next trading session, as indicated by its wave pattern and a Fibonacci ratio analysis, said Reuters analyst Wang Tao.

 

Shanghai copper prices have climbed 5 percent since hitting an eight-month low in June. The recent drop in prices have encouraged some end-users to restock, in turn helping to draw down copper inventories held at exchange and bonded warehouses.

 

Still, analysts have cautioned that Chinese end-users were still buying on a hand-to-mouth basis amid an uncertain economic outlook and sluggish domestic demand.

 

Hopes of a Fed stimulus were also tempered by fears that Spain's debt crisis could spiral out of control, with its soaring borrowing costs showing that a euro zone deal to lend its bank up to 100 billion euros ($126 billion) had not solved its problems or restored investor confidence. It also suggests more aid may be needed to fix its finances.

 

In China, a group of senior advisers have called on the government to relax property market restrictions to shore up its slowing economy, a state-backed newspaper reported on Wednesday. Such a move will likely boost base metal demand from the real estate sector.

    

  Base metals prices at 0507 GMT

  Metal              Last       Change   Pct Move YTD pct chg

  LME Cu            7580.00    -29.00     -0.38     -0.26

  SHFE CU FUT OCT2    55090       420     +0.77     -0.49

  HG COPPER JUL2     342.55     -0.80     -0.23     -0.31

  LME Alum          1925.00     -0.50     -0.03     -4.70

  SHFE AL FUT OCT2    15710        25     +0.16     -0.85

  LME Zinc          1892.75     -6.25     -0.33      2.59

  SHFE ZN FUT SEP2    14895        35     +0.24      0.68

  LME Nickel       17076.00    -19.00     -0.11     -8.73

  LME Lead          1910.75     -1.75     -0.09     -6.11

  SHFE PB FUT      15060.00     65.00     +0.43     -1.47

  LME Tin          19600.00     70.00     +0.36      2.08

  LME/Shanghai arb^    1071

 

   Shanghai and COMEX contracts show most active months

   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month

 ($1 = 6.3545 Chinese yuan)