Copper Up on Stimulus Hopes Ahead of Bernanke Testimony-Shanghai Metals Market

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Copper Up on Stimulus Hopes Ahead of Bernanke Testimony

Industry News 02:00:40PM Jul 17, 2012 Source:SMM

SHANGHAI, July 17 (Reuters) - Copper rose on Tuesday, supported by hopes of more monetary stimulus from the U.S. Federal Reserve, after weak retail sales data added to evidence the world's largest economy was slowing.

Investors are awaiting Fed Chairman Ben Bernanke's Congressional testimony for clues on whether the central bank will launch further easing measures to shore up the economy.

Three-month copper on the London Metal Exchange inched up 0.3 percent to $7,717 per tonne by 0331 GMT, after falling slightly by 0.1 percent in the previous session.

The most-active November copper contract on the Shanghai Futures Exchange rose 0.1 percent to 56,270 yuan ($8,800) per tonne by the midday close.

"With Bernanke starting his report tonight, investors are cautiously optimistic of more quantitative easing by the Fed and these sentiments are supporting base metal prices," a copper buyer based in Shanghai said.

Hopes for more stimulus by the Fed were further stirred by a forecast downgrade of global economic growth by the International Monetary Fund and a third consecutive monthly fall in U.S. retail sales in June. 

Bets on more aggressive monetary action in the United States were evident in record low U.S. government bond yields on Monday, which analysts said was a sign that people were starting to price in more easing.

While government stimulus may boost copper prices from current levels, 2012 average prices are set to fall from last year's average cash contract on the LME at $8,812 a tonne to around $8,003 a tonne, a Reuters poll revealed.

In industry news, China's refined copper output in June rose 11.6 percent on the year and 7 percent on the month to 518,000 tonnes, the country's Statistics Bureau said.

Market players said this was due to smelters betting on improved demand in the second half of the year and Chinese copper producers delivering into LME warehouses in Asia.
 
"Big producers like Jiangxi Copper have been delivering into LME warehouses in Asia for the past two months to take advantage of higher LME prices. We've heard the government has waived export duties on these deliveries," said one Shanghai-based trader.

"Besides enjoying an export duty waiver, Jiangxi Copper has also been switching their own output with companies that are supposed to deliver bonded goods into the domestic markets," said another Shanghai-based trader.

"Jiangxi would deliver their own output to domestic buyers of bonded material in return for the same tonnage in bonded material for direct export," he added.
                                                           
  Base metals prices at 0331 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7717.00     26.00     +0.34      1.54
  SHFE CU FUT NOV2    56270        50     +0.09      1.15
  LME Alum          1914.50     -3.00     -0.16     -5.22
  SHFE AL FUT OCT2    15600       -05     -0.03     -1.52
  HG COPPER SEP2     350.50      2.00     +0.57      2.01
  LME Zinc          1880.00    -10.00     -0.53      1.90
  SHFE ZN FUT NOV2    14860        15     +0.10      0.44
  LME Nickel       16175.00    -50.00     -0.31    -13.55
  LME Lead          1893.25     -6.75     -0.36     -6.97
  SHFE PB FUT         15000         5     +0.03     -1.90
  LME Tin          18777.00     27.00     +0.14     -2.20
  LME/Shanghai arb    1342
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
 ($1=6.3787 Chinese yuan)

 

Copper Up on Stimulus Hopes Ahead of Bernanke Testimony

Industry News 02:00:40PM Jul 17, 2012 Source:SMM

SHANGHAI, July 17 (Reuters) - Copper rose on Tuesday, supported by hopes of more monetary stimulus from the U.S. Federal Reserve, after weak retail sales data added to evidence the world's largest economy was slowing.

Investors are awaiting Fed Chairman Ben Bernanke's Congressional testimony for clues on whether the central bank will launch further easing measures to shore up the economy.

Three-month copper on the London Metal Exchange inched up 0.3 percent to $7,717 per tonne by 0331 GMT, after falling slightly by 0.1 percent in the previous session.

The most-active November copper contract on the Shanghai Futures Exchange rose 0.1 percent to 56,270 yuan ($8,800) per tonne by the midday close.

"With Bernanke starting his report tonight, investors are cautiously optimistic of more quantitative easing by the Fed and these sentiments are supporting base metal prices," a copper buyer based in Shanghai said.

Hopes for more stimulus by the Fed were further stirred by a forecast downgrade of global economic growth by the International Monetary Fund and a third consecutive monthly fall in U.S. retail sales in June. 

Bets on more aggressive monetary action in the United States were evident in record low U.S. government bond yields on Monday, which analysts said was a sign that people were starting to price in more easing.

While government stimulus may boost copper prices from current levels, 2012 average prices are set to fall from last year's average cash contract on the LME at $8,812 a tonne to around $8,003 a tonne, a Reuters poll revealed.

In industry news, China's refined copper output in June rose 11.6 percent on the year and 7 percent on the month to 518,000 tonnes, the country's Statistics Bureau said.

Market players said this was due to smelters betting on improved demand in the second half of the year and Chinese copper producers delivering into LME warehouses in Asia.
 
"Big producers like Jiangxi Copper have been delivering into LME warehouses in Asia for the past two months to take advantage of higher LME prices. We've heard the government has waived export duties on these deliveries," said one Shanghai-based trader.

"Besides enjoying an export duty waiver, Jiangxi Copper has also been switching their own output with companies that are supposed to deliver bonded goods into the domestic markets," said another Shanghai-based trader.

"Jiangxi would deliver their own output to domestic buyers of bonded material in return for the same tonnage in bonded material for direct export," he added.
                                                           
  Base metals prices at 0331 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7717.00     26.00     +0.34      1.54
  SHFE CU FUT NOV2    56270        50     +0.09      1.15
  LME Alum          1914.50     -3.00     -0.16     -5.22
  SHFE AL FUT OCT2    15600       -05     -0.03     -1.52
  HG COPPER SEP2     350.50      2.00     +0.57      2.01
  LME Zinc          1880.00    -10.00     -0.53      1.90
  SHFE ZN FUT NOV2    14860        15     +0.10      0.44
  LME Nickel       16175.00    -50.00     -0.31    -13.55
  LME Lead          1893.25     -6.75     -0.36     -6.97
  SHFE PB FUT         15000         5     +0.03     -1.90
  LME Tin          18777.00     27.00     +0.14     -2.20
  LME/Shanghai arb    1342
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month
 ($1=6.3787 Chinese yuan)