METALS-Copper ends up on China buys, U.S. data

Tue Jun 26, 2012 12:55am IST

* Copper stems slide as trade awaits EU summit plan
    * Some pick-up in Chinese copper restocking
    * Aluminum recovers after hitting 2 year low

    By Chris Kelly and Silvia Antonioli
    NEW YORK/LONDON, June 25 (Reuters) - London copper rose on Monday for the
first time in four days and New York prices also firmed, with sellers silenced
at the start of the week by signs of buying in China and improved demand
prospects in the United States.
    Copper pressed higher in healthy volume, as investors shifted their
attention away from the European debt situation and focused on an improved
demand outlook in the U.S. after data showed new home sales surged in May to a
two-year high. 
    Most other base metals followed copper's lead. Aluminum futures ended up
after sinking to a two-year low, tin bounced away from its lowest since
September last year, and zinc fully recovered after dropping to its cheapest
since late October.
    Investors bet demand prospects will improve should a June 28-29 meeting of
European Union leaders produce substantive measures to tackle the debt crisis,
now in its third year and bolster Spain, the euro zone's fourth-largest economy.
    "Markets are holding their fire at the moment to see what the Europeans come
up with at this week's leadership conference. If they don't see any movement on
key proposals, they very well could drive the markets lower again," INTL FCStone
analyst Ed Meir said.
    London Metal Exchange (LME) benchmark copper ended up $26 at $7,336
a tonne, recovering from a Friday trough at $7,219.50 -- a low dating back to
December.
    In New York, the now-active COMEX September contract rose 1.05 cents
to settle at $3.3255 per lb, after dealing between $3.2880 and $3.3420.
    COMEX copper volumes stood at 84,500 lots in late New York business, a shade
above the 30-day average of around 80,000 lots, according to preliminary Thomson
Reuters data.
    Initial optimism following an agreement by the leaders of Germany, France,
Italy and Spain on a 130 billion euro ($156 billion) package to revive growth
faded as investors remained pessimistic that this week's European Union summit
will yield concrete measures to tackle the region's debt crisis. 
    The Thursday-Friday summit of European leaders is likely to include
discussions about specific steps towards a cross-border banking union, closer
fiscal integration and the possibility of a debt redemption fund.
 
    The focus also remained on Spain, which formally requested euro zone rescue
loans on Monday to recapitalizes banks that are laden with bad debts.
 
    Highlighting investor uncertainty surrounding global growth prospects, data
last week from the Commodity Futures Trading Commission showed money managers
trimmed their net short copper position during the week of June 19, the first
decline in this bearish position in four weeks.
     
    PHYSICAL BUYING
    Limited copper restocking by Chinese investors, designed to exploit a
favorable arbitrage between London and Shanghai, worked to support prices at the
start of the week.
    "There has been some consumer buying for copper, but it was only some spot
buying and the size moderate. You won't have the large hedges coming in at this
price as people don't have enough conviction and think the market might be
trending lower," Ivan Szpakowski, analyst at Credit Suisse said.
    A Shanghai-based trader said a slight rise in physical copper demand was
expected to put a floor below copper prices as consumers took advantage of lower
prices and the favorable LME-ShFE arbitrage to restock a bit.
    Aluminum ended up $4 at $1,865 a tonne, rebounding from an earlier
fall to $1,852 -- its lowest level since early June, 2010. 
    "Following the sharp decline in energy prices and thanks to subsidized
electricity prices in China, we are also unlikely to see any significant cuts in
production (of aluminum) in the foreseeable future, so the aluminum price can be
expected to remain under pressure," Commerzbank analysts said in a note. 

 Metal Prices at 1841 GMT 
                                                                  
 Metal            Last      Change  Pct Move   End 2011   Ytd Pct 
                                                             move 
 COMEX Cu       332.80        2.20     +0.67     343.60     -3.14 
 LME Alum      1864.50        3.50     +0.19    2020.00     -7.70 
 LME Cu        7335.00       25.00     +0.34    7600.00     -3.49 
 LME Lead      1787.00      -29.00     -1.60    2035.00    -12.19 
 LME Nickel   16420.00     -155.00     -0.94   18710.00    -12.24 
 LME Tin      18525.00     -150.00     -0.80   19200.00     -3.52 
 LME Zinc      1804.00        4.00     +0.22    1845.00     -2.22 
 SHFE Alu     15520.00      -40.00     -0.26   15845.00     -2.05 
 SHFE Cu*     54330.00      -20.00     -0.04   55360.00     -1.86 
 SHFE Zin     14555.00      -75.00     -0.51   14795.00     -1.62 
 ** Benchmark month for COMEX copper 
 * 3rd contract month for SHFE AL, CU and ZN 
 SHFE ZN began trading on 26/3/07
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