Copper firm as market eyes Chinaadmin
Copper and other key industrial metals prices were firm on the London Metal Exchange on Friday as traders assessed the likelihood of fresh Chinese buying.
“We’ve seen copper correcting then holding at a level, but our view is that there will be Chinese buying after their New Year holidays,” a fund manager said.
Copper ended the day up $165 at $5,580 per tonne, its highest for a week.
In New York, copper for March delivery settled up 6.70 cents, or 2.7 percent, at $2.5175 a lb on the New York Mercantile Exchange’s COMEX division, its best settlement since Feb. 1. Trading ranged from an overnight low at $2.4505 to $2.5310.
London zinc closed at $3,130 versus Thursday’s close of $3,127.50.
A potential strike at Southern Copper’s Ilo, a 1.2 million-tonnes-per-year copper concentrate smelter in Peru, supported copper prices [ID:nN08237574].
In Bolivia, the government seized control of a tin smelter complex owned by Switzerland-based commodities trader Glencore [ID:nN09181979].
EYES ON CHINA
Fortis investment bank said in a monthly report that the question dominating the copper market was how much China would import this year.
It said there were no signs of a big upsurge in Chinese buying despite prices falling by 15 percent since January.
Asian traders said Chinese demand for copper was rising as fabricators bought metal for production after the Lunar New Year holidays that stars on February 18.
But they said the increase was partially offset by rising imports in the cash market and deliveries by Chinese smelters.
Last week the world’s largest copper producer Codelco made a long-term deal, March-December, with material going to China for a premium over cash metal of over $100, in contrast to premiums in Europe trading at around $20-50, traders said.
Analyst Robin Bhar at UBS said Singapore regional copper premiums had more than doubled in the past 10 days to $50-70, indicating a recovery in Chinese demand.
“We therefore remain cautiously constructive into the second quarter,” Bhar said in his report.
In Shanghai, copper stocks rose by 2,654 tonnes this week to 26,652.
Analyst Jon Bergtheil of JP Morgan said rising stocks contradicted the view that Chinese buyers had returned to the market.
Copper’s gains helped push the Reuters/Jefferies CRB Index of commodities to a five-week high, as did higher oil prices ID:nN09211917].
FUND IN FOCUS
Copper fell to 10-month lows of $5,250 last Friday after the Wall Street Journal reported that $1.5 billion hedge fund Red Kite had lost 20 percent of its value.
Analyst Edward Meir at Man Financial said in a report: “If, as it is widely believed, the fund is mostly long, the more stability metal prices exhibit from here on in, the less inclined investors will be to head for the exits.”
Aluminium was little changed at $2,700 against $2,690 on Thursday, when prices touched a one-month low of $2,614.
Stocks in LME warehouses rose by 1,450 tonnes to 757,275.
The inflow was attracted by the high cash premium, or backwardation, which eased slightly to $83/85 per tonne down from $114/116 ahead of Wednesday’s option expiry.
Fears grew of another strike in Guinea which could hit the bauxite and alumina industry there [ID:nL09174265], while in Europe a plan to cut the EU’s import duties on wrought aluminium was blocked on Friday [ID:nL09661664].
Nickel ended the day at $36,200 versus its last quote of $35,450/35,500 on Thursday. The backwardation eased to $2,450/2,550 after touching a recent high of $3,600 on Tuesday.
Stocks in LME warehouses rose by 24 tonnes to 3,678, of which 3,000 were available to the market.
Tin was up at $12,325 versus $12,100 and lead traded higher at $1,625 against $1,574/1,575.
Source: Reuters via Yahoo News