Search

METALS-Copper falls as grim data reins in recent optimism

Reuters - Friday, July 3

* Dollar strengthens broadly, equities slide

* U.S. jobs data comes in far worse than expected

By Michael Taylor and Rebekah Curtis

LONDON, July 2 - Copper fell on Thursday, as grim U.S. and European data underlined concern that global economic recovery could be a long way off, and as a firmer dollar added pressure.

Copper for three month delivery <MCU3> on the London Metal Exchange closed at $5,035 a tonne from $5,090 on Wednesday.

Hitting sentiment was data showing U.S. employers cut 467,000 jobs in June, 100,000 more than expected, with the unemployment rate rising to 9.5 percent. [ID:nN01210643]

And as the European Central Bank held rates at 1 percent, its chief warned weak economic activity would hamper growth and gradual recovery would only emerge by mid-2010. [ID:nL2512532]

"Following non-farm payrolls and comments from the ECB we've seen the dollar strengthen and that's seen most commodity prices under pressure," said John Reade, analyst at UBS.

Also hurting sentiment were figures showing euro zone unemployment hit its highest in 10 years in May. [ID:nL2242351] European and U.S. equities tumbled after the data [.EU] [.N].

Copper earlier fell as much as 2.4 percent to a session low of $4,966.50. But the metal pared earlier losses to close about 1 percent lower, with sentiment helped by forecast-beating data that showed new orders for U.S. manufactured goods jumped 1.2 percent in May, their largest increase in nearly a year. [ID:nN0220084]

SUMMER LULL

But analysts warn economic recovery is not yet within reach.

"If data continues to come out very negative, we could go down to $4,600. I wouldn't be shocked if we went down to $4,300," Andrey Kryuchenkov, analyst at London's VTB Capital said of copper.

"It is bad," he said of Thursday's earlier data. "But sentiment is so much better compared to in January or February."

Copper, used in power and construction, has risen about 60 percent this year, boosted by Chinese stockpiling. But Chinese buying appears to be fading and, as the summer lull sets in, analysts expect base metals to weaken in coming months.

Pockets of better data recently has spurred faint optimism among investors. Copper surged on Wednesday to $5,187.50 a tonne -- its highest in more than two weeks -- after upbeat manufacturing surveys in the United States, Europe and China.

A weaker dollar has helped base metals in recent weeks, but the U.S. currency strengthened on Thursday, making metals priced in dollars more expensive other currency holders. [USD/]

Aluminium was at $1,640 from $1,663. LME inventories of the metal, used in transport and packaging, rose 2,500 tonnes, nearing a record high close to 4.4 million tonnes.

Aluminium rose about 16 percent in the second quarter, buoyed by Chinese demand and a slew of improving economic data.

But idled smelters re-starting and continued weak economic conditions could hinder prices, analysts said.

Steel-making ingredient nickel <MNI3> was little changed at $16,450, while battery material lead <MPB3> was at $1,700 from $1,739.

Zinc <MZN3> traded at $1,560 a tonne from $1,595 and tin <MSN3> was last quoted at $14,300/14,350 from $14,500.

Worries about nearby tin supplies have pushed the premium for cash material over the three-month contract to around $75 a tonne from a discount of around $40 a tonne in mid-June.

Earlier, the LME experienced technical problems with its price updates. [ID:nL2583189] Metal Prices at 1611 GMT Metal Last Change Pct Move End 2008 Ytd Pct

move COMEX Cu 228.45 -3.05 -1.32 139.50 63.76 LME Alum 1640.00 -23.00 -1.38 1535.00 6.84 LME Cu 5030.00 -60.00 -1.18 3060.00 64.38 LME Lead 1704.00 -35.00 -2.01 999.00 70.57 LME Nickel 16450.00 0.00 +0.00 11700.00 40.60 LME Tin 14300.00 -450.00 -3.05 10700.00 33.64 LME Zinc 1564.00 -31.00 -1.94 1208.00 29.47 SHFE Alu 13465.00 45.00 +0.34 11540.00 16.68 SHFE Cu* 40190.00 -150.00 -0.37 23840.00 68.58 SHFE Zin 13400.00 0.00 +0.00 10120.00 32.41 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

Sign in to recommend this article »
0 users recommend

Related Articles: Business