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METALS-LME copper comes off 1-wk high; China stimulus, Fed eyed
July 16, 2012 / 8:13 AM / 5 years ago

METALS-LME copper comes off 1-wk high; China stimulus, Fed eyed

* Metals prices ease as buyers turn to agricultural futures
    * China pledges efforts to stabilise economy in H2
    * Fed chief's report eyed for clues on quantitative easing
    * Investors eye euro zone trade data for May

 (Updates prices; adds quotes, details)
    By Carrie Ho
    SHANGHAI, July 16 (Reuters) - London copper slipped on
Monday from the previous session's one-week high as surging
grains futures drew away some buying power, while investors
waited to see if this week's presentation by the U.S. Fed
chairman would yield any clues on monetary easing.
    But losses were reined in by hopes of further stimulus from
top copper consumer China after Premier Wen Jiabao said Beijing
would step up efforts to boost the economy. Recent data showed
China slowed for the sixth successive quarter to expand by 7.6
percent in the three months from April to June. 
    Any move by Beijing to ramp up infrastructure spending would
bolster demand for industrial metals, especially copper.
    Three-month copper on the London Metal Exchange 
inched down 0.3 percent to $7,680.25 per tonne by 0720 GMT.    
Prices rose 1.9 percent and hit a one-week high at $7,730 in the
previous session.
    "London base metals have fallen this morning as Chinese
investors are sidetracked b y trading in agricultural products
such as soybeans and soybean meal," said a Shanghai-based
commodities broker. 
    The most-active October copper contract on the Shanghai
Futures Exchange rose 0.7 percent to 56,170 yuan
($8,800) per tonne, catching up with London's previous gains.
    "There's a lot of latent buying power out there waiting for
the right time to enter the base metals markets as many expect
more stimulus by Beijing soon," the broker said. 
    "I've advised my clients to cut short positions and be ready
to take up fresh long positions," he added.
    During a tour of Sichuan province, Chinese Premier Wen said
that the government would "increase efforts to preset and
fine-tune its policies" to help combat risks that lie ahead for
the world's second-largest economy.
    Comments by state-backed media on Monday also suggested that
a slew of pro-growth measures could be unveiled as early as
Wednesday, with economists expecting Beijing to boost investment
spending to sustain growth.  
    In physical markets, the Shanghai copper forward curve
flipped into a contango on Monday after being backwardated since
early May, indicating less tightness in immediate supply.
    "There is more immediate supply now as copper prices have
risen to a level that sellers are comfortable selling at, while
ShFE stocks have also increased steadily since mid-June," said
an executive with a copper fabricator. 
    Shanghai copper stocks had risen 23.7 percent on Friday to
160,928 tonnes from 130,143 tonnes on June 15. CU-STX-SGH
    "The contango also indicates more optimism over China's
economy in the second half of the year on anticipation of more
aggressive stimulus by Beijing. The market thinks copper prices
should be higher in the forward months," he added.    
    But investors are likely to stay cautious ahead of Fed
chairman Ben Bernanke's semi-annual monetary policy report to
Congress on Tuesday and Wednesday, in case the central bank
surprises with fresh stimulus measures. 
    "Many things will have to happen before the U.S. rolls out
more quantitative easing, but we have to be vigilant before
Bernanke's report in case of surprise developments," Great Wall
Futures analyst Li Rong said.
    In the minutes released last week of the Fed's June 19-20
policy meeting, the central bank kept open the option of a third
round of outright bond purchases, or quantitative easing (QE) in
market jargon, if the economy took a marked turn for the worse,
but appeared to set a high bar for such aggressive action.    
    Underlying concerns over the global economy may cap base
metals, after U.S. consumer sentiment cooled again in early July
to its lowest level in seven months. 
    Also, the debt crisis that grinds on in the euro zone
continues to blur the demand outlook for most commodities.
    Italian 10-year government bond yields rose on Friday,
winning little respite from a solid debt sale as a surprise
ratings cut by Moody's highlighted the risk that the euro zone's
third biggest economy could eventually fall victim to the debt
  Base metals prices at 0720 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7680.25    -19.75     -0.26      1.06
  SHFE CU FUT OCT2    56170       400     +0.72      0.97
  LME Alum          1908.00     -2.00     -0.10     -5.54
  SHFE AL FUT OCT2    15605        85     +0.55     -1.48
  HG COPPER SEP2     348.25     -2.15     -0.61      1.35
  LME Zinc          1869.00     -5.00     -0.27      1.30
  SHFE ZN FUT OCT2    14800        15     +0.10      0.03
  LME Nickel       16150.00    -50.00     -0.31    -13.68
  LME Lead          1880.75      0.75     +0.04     -7.58
  SHFE PB FUT         14995        35     +0.23     -1.93
  LME Tin          18650.00   -130.00     -0.69     -2.86
  LME/Shanghai arb    1129
   Shanghai and COMEX contracts show most active months
   ^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE 
 third month
 ($1 = 6.3789 Chinese yuan)

 (Editing by Ed Davies and Himani Sarkar)

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