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METALS-Copper slips on low China buys; Greek boost fades
March 20, 2012 / 3:42 AM / 6 years ago

METALS-Copper slips on low China buys; Greek boost fades

* ShFE-LME three-months copper price differential weakest
since Jan 2012
    * Lacklustre Chinese demand seen capping copper gains
    * Coming up: Feb U.S. housing starts/building permits; 1230

 (Adds analyst, trader comment, detail, updates prices)	
    By Melanie Burton	
    SINGAPORE, March 20 (Reuters) - London copper turned
negative on Tuesday as support began to fade from an orderly
auction of Greek default insurance that boosted the euro, while
bleak demand expectations from Chinese copper consumers
discouraged buys.	
    Three-month copper on the London Metal Exchange fell
0.41 percent to $8,535 per tonne by 0314 GMT, having taken aim
at $8,600 earlier in the session. 	
    Copper hit its highest in two weeks at $8,690 on Friday and
is up more than 12 percent this year, but prices have struggled
to gain traction above this level.	
    The most-traded June copper contract on the Shanghai Futures
Exchange eased 0.05 percent to 60,270 yuan ($9,500) per
    Demand from top consumer China remained slack, with little
hope for solid improvement from Chinese consumers, given that
demand from their export markets is still soft, Standard
Chartered metals analyst Judy Zhu said.	
    "In the last week copper prices have stabilized around
$8,500 a tonne, but it's really moving nowhere and facing strong
overhead resistance," she said.	
    "Demand is starting to recover from last months' previously
low levels but consumers don't expect any strong recovery this
year - that's the problem."  	
    China is the world's biggest consumer of copper, accounting
for 40 percent of refined demand. 	
    Consumers remain destocked and reluctant to purchase any
more material than they need immediately because of expectations
prices will stay low and the high cost of financing material in
China, where access to credit remains cramped.	
    Reflecting an absence of near term purchases, the negative
price differential between London and Shanghai copper hit a
14-month low near $450 on Tuesday, while front month Shanghai
copper remains at a 400-yuan discount to third-month prices,
having been at a premium late last year.	
    Still, China's arrivals of refined copper may rise this
month after February's higher than expected figure, as importers
scheduled more term shipments under 2012 contracts, traders
said, and as metal is used for financing purposes. The February
breakdown will be released on March 21. 	
    Lending some support to prices, the dollar fell as easing
fears about the threat posed to the euro zone by Greece
diminished the U.S. currency's safe-haven appeal, while Asian
shares crept higher following a rally on Wall Street.
    Markets will be watching closely for U.S. housing figures
later in the session, after poor figures for China's housing
market on Monday flustered investors, Credit Suisse Private
Banking said in a note.	
    "Market participants expect a moderate pick-up of activity
from very low levels. This would be positive news for metals, as	
housing accounts for a sizeable share of metals demand," it
    In metals news, Venezuela's state-run aluminium producer,
Alcasa, will use a $403-million loan from China to prop up its
operations, which would allow the company to resume exports to
several Latin American countries, Alcasa's president said on
    Also, Australia's parliament passed laws for a new 30
percent tax on iron ore and coal mine profits on Monday after a
bruising two-year battle with mining companies, in a major
victory for Prime Minister Julia Gillard and her struggling
minority government. 	
  Base metals prices at 0314 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            8535.00    -35.00     -0.41     12.30
  SHFE CU FUT JUN2    60270       -30     -0.05      8.87
  HG COPPER MAY2     388.35     -2.55     -0.65     13.02
  LME Alum          2270.00     -5.00     -0.22     12.38
  SHFE AL FUT JUN2    16265       -10     -0.06      2.65
  LME Zinc          2072.50     -6.50     -0.31     12.33
  SHFE ZN FUT JUN2    15860       -15     -0.09      7.20
  LME Nickel       19000.00    -50.00     -0.26      1.55
  LME Lead          2102.50     -5.50     -0.26      3.32
  SHFE PB FUT      15855.00    -10.00     -0.06      3.73
  LME Tin          23600.00      5.00     +0.02     22.92
  LME/Shanghai arb^    2840
   Shanghai and COMEX contracts show most active months
 ($1=6.3233 Chinese yuan)	
 (Reporting by Melanie Burton; Editing by Clarence Fernandez)

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