METALS-Copper rebounds from 3-mth low; China property curbs weigh

Mon Mar 4, 2013 10:48pm IST

* China could hike down payments, loan rates for second
homes
    * Inconclusive Italian election, U.S. spending cuts weigh
    * Copper down 2.5 pct in year to date

    By Maytaal Angel and Harpreet Bhal
    LONDON, March 4 (Reuters) - Copper rose on Monday,
rebounding from three-month lows hit in the previous session,
but gains were kept in check by a political stalemate in the
United States and Italy, and by plans in top consumer China for
tighter property sector controls.
    Three-month copper on the London Metal Exchange 
ended at $7,725 a tonne, up from Friday's close of $7,700, when
it fell in intraday trade to its lowest in more than three
months at $7,652 a tonne.
    China, which accounts for 40 percent of refined copper
demand, could increase required down payments and loan rates for
buyers of second homes in cities where prices are rising too
quickly, in its latest move to contain housing costs.
    Copper is used extensively for both wiring and building
houses.
    Investors also had to contend with the aftermath of an
inconclusive election in Italy that has cast doubt on the euro
zone's austerity-led solution to its debt crisis, and with U.S.
spending cuts that threaten to dampen growth in the world's
largest economy.
    "There's awful lot of surprises this year and none of them
good. Relative to original expectations (U.S. spending cuts)
could easily knock 1 to 1.5 percentage points off growth," said
Nic Brown, head of commodities research at Natixis.
    On China, he added: "Real estate has been a very important 
part of Chinese growth and for the authorities to be clamping
down on it even if the rest of the economy is doing well, this
is a dent in expectations for Chinese growth." 
    In further pressure on copper, the dollar traded near a
2-1/2 month high versus the euro after euro zone sentiment
tumbled in March. A strong dollar makes dollar-priced metals
costlier for European and other non-U.S. investors. 
    Also weighing, data on Sunday showed growth in China's
services sector expanded at its slowest pace in five months in
February. Last week, meanwhile, data showed China's factory
growth cooled to multi-month lows in February.
    Copper shed more than 4 percent in February to more than
erase gains for the year. it is trading 2.5 percent lower on the
year to date. 
    "We think the technicals in base metals continue to look
poor, and we likely will push lower over the next two weeks 
before recovering by the second half," said Ed Meir, analyst at
INTL FCStone.
    "Chinese demand for metals has yet to kick into high gear,
telling us that government spending alone is not enough to
absorb available units and that the other two drivers in the
Chinese economy, exports and consumer spending, need to crank up
a gear."
          
    
    DOWNSTREAM DEMAND
    Property sector curbs and slowing factory growth China have
dented sentiment towards metals, said Judy Zhu, an analyst at
Standard Chartered in Shanghai.
    "But what I see and hear in the copper market is that
consumption is now improving seasonally," she said.
    "Downstream consumers, especially the air conditioner
sector, may have to replenish their stockpiles in the coming
weeks. We see mild upside risks in the next month or two -
$7,600-$7,700 for copper is a pretty good buy."
    Latest LME stock data, however, brought further headwinds
for copper bulls, showing stocks up at 462,400 tonnes, the
highest since early October 2011, and amounting to a rise of
around 200,000 tonnes since early December.
    Also, ShFE copper stocks surged by 18,492
tonnes, or 8.9 percent, data on Friday showed.
    "The technical picture continues to look poor and many model
based traders are now getting themselves short in base metals,"
said RBC Capital in a client note.
    "Trade buyers are appearing again on dips and we would
expect the Chinese to have interest in copper should the red
metal get down to $7,500, but it's hard to justify a position
either way at the moment."
    In other metals traded, soldering material tin ended
at $23,375 from Friday's close of $23,250, while zinc,
used in galvanizing, ended at $2,002 from $2,021, having earlier
hit a month and a half low of $1,995 a tonne.
    Battery material lead closed at $2,216 from Friday's
close of $2,244, earlier falling to its lowest since early
December at $2,213 a tonne. 
    Aluminium ended at $1,974 from $1,975, while
stainless-steel ingredient nickel closed at $16,450 from
$16,605. 
    
 Metal Prices at 1709 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2012   Ytd Pct
                                                              move
  COMEX Cu       349.65        0.60     +0.17     365.25     -4.27
  LME Alum      1975.00        0.00     +0.00    2073.00     -4.73
  LME Cu        7733.00     -137.00     -1.74    7931.00     -2.50
  LME Lead      2219.00      -25.00     -1.11    2330.00     -4.76
  LME Nickel   16523.00      -82.00     -0.49   17060.00     -3.15
  LME Tin      23350.00      100.00     +0.43   23400.00     -0.21
  LME Zinc      2003.50      -17.50     -0.87    2080.00     -3.68
  SHFE Alu     14575.00      -95.00     -0.65   15435.00     -5.57
  SHFE Cu*     56350.00     -540.00     -0.95   57690.00     -2.32
  SHFE Zin     15295.00     -185.00     -1.20   15625.00     -2.11
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