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Monthly Archives: August 2011

Copper in London Drops for First Day in Six on Global Growth Concerns

Copper in London Drops for First Day in Six on Global Growth Concerns

 

Copper swung between gains and losses, heading for the biggest monthly drop since May 2010 as worsening U.S. consumer confidence stoked concern that growth may stall. Tin was set for the largest loss since October 2008.

Three-month delivery copper on the London Metal Exchange lost as much as 0.5 percent to $9,114 a metric ton before trading at $9,202.50 at 3:33 p.m. Singapore time. The price touched $9,225 yesterday, the highest since Aug. 5. The metal has fallen 6.5 percent this month, the first such decline in three months.

The Conference Board’s index of consumer confidence in the U.S., the world’s second-largest copper user, slumped to 44.5, the weakest since April 2009. It was the biggest point drop since October 2008, falling from a revised 59.2 reading in July, figures from the New York-based research group showed yesterday. A separate report showed home prices declined for a ninth month.

The market is under downward pressure from “concern over European sovereign debt and U.S. growth and unemployment,” Nick Trevethan, senior commodities strategist at Australia & New Zealand Banking Group Ltd., said today by phone from Singapore.

A further drop in price would be limited as supplies are likely to decline with an 18 percent drop in Chilean output and a potential strike at Indonesia’s Grasberg mine, he said.

Japan Output

Industrial production in Japan rose less than expected in July, signaling that the nation’s recovery from the March 11 earthquake and tsunami is losing momentum as the yen gains and overseas demand slows. In South Korea, industrial output expanded at the slowest pace in 10 months as weakness in global growth threatens the outlook for exports.

Factory output in Japan, the world’s third-largest economy, increased 0.6 percent in July from June, the slowest gain since March, the Trade Ministry said in Tokyo today. The median estimate of 28 economists surveyed by Bloomberg News was for a 1.4 percent gain after a 3.8 percent increase in June.

Copper for November delivery on the Shanghai Futures Exchange was little changed at 68,190 yuan ($10,670) a ton.

Aluminum in London advanced 0.4 percent to $2,435.25 a ton. Still, the metal has slumped 7.2 percent this month, the biggest fall since May 2010. Zinc gained 0.2 percent to $2,290 a ton. Lead rose 0.4 percent to $2,568 a ton, after dropping as much as 1.6 percent.

Nickel added 0.2 percent to $21,950 a ton after dropping as much as 0.7 percent and tin jumped 1 percent to $24,250 a ton. Tin has slumped 14 percent this month, the biggest loss since October 2008.

Aug 31, 2011

METALS-Shanghai copper up on firmer dollar, strike threat

METALS-Shanghai copper up on firmer dollar, strike threat

 
 
    By Carrie Ho
    SHANGHAI, Aug 29 (Reuters) – Shanghai copper edged up on
Monday as the dollar widened its losses and investors focused on
a possible strike at the world's third largest copper mine,
Indonesia's Grasberg.
    But news that Beijing will ask banks to hold more reserves
and worries about a global economic slowdown may limit price
rises.
    The most-active November copper contract on the Shanghai
Futures Exchange SCFc3 inched up 0.3 percent to close at
67,610 yuan per tonne after rising 1 percent in the previous
session.
    The dollar lent support to commodities as its losses
against a basket of major currencies widened, with traders
betting on more Fed stimulus in the face of an uncertain growth
outlook.
    A threat of supply disruption at Freeport-McMoRan Copper &
Gold's Grasberg mine in Indonesia lent support to copper
prices, after workers' talk with the company failed to resolve a
pay dispute.
    China has ordered banks to include their margin deposits in
required reserves at the central bank in an attempt to mop up
excessive liquidity, banking sources said on Friday, the latest
move in Beijing's campaign to rein in inflation.
    "Rumours about the latest bank tightening move have been
circulating since last Monday, so the shock factor wanes after a
while," said Dongzheng Futures trader Du Xiao Hua.
    "The move also encourages the belief that the government
will combat inflation with bank reserves rises and yuan
appreciation, rather than more disruptive interest rates rises.
    "Also, some copper investors may be cheered by the
possibility of some Chinese restocking in September and
October," he added.
    
    Federal Reserve Chairman Ben Bernanke on Friday stopped
short of detailing further action to boost the U.S. recovery but
said the central bank would consider what more it could do to
fight high unemployment, giving some comfort to investors.

    "In the short term I think base metal price movements will
be small as investors struggle to find direction after
Bernanke's speech, where he didn't offer anything concrete on
the U.S. economy but gave us some hope," said Jinrui Futures
analyst Zhao Kai.
    In New York, the benchmark September COMEX contract
fell 0.1 percent to 409.55 cents per lb ($9,029 a tonne) by 0712
GMT, weighed down by the latest U.S. Commodity Futures Trading
Commission data, which showed that hedge and pension funds
turned net short in copper for the first time since late 2009 in
the week ended Aug. 23.
    Investors are also eyeing global growth prospects as the
struggling U.S. economy expanded even more slowly than
previously thought in the second quarter of 2011.
    But a breakdown of the growth suggested a new recession
could be avoided.
    The new head of the IMF on Saturday called on global
policymakers to pursue urgent action, including forcing European
banks to bulk up their capital, to prevent a descent into a
renewed world recession. 
    In industry news, Terramin Australia said that its
processing plant at its Angas lead and zinc mining operation is
now fully operating after repairs following an electrical
incident. It cut its full-year production forecast by 4 percent
to 45,000 tonnes of zinc concentrate.
    Production of copper and zinc fell in July in Peru due to
shrinking reserves at key mines and lower-quality ore, the
government said on Sunday.
    The Andean country produced 100,478 tonnes of copper and
103,455 tonnes of zinc last month, down 5.6 percent and 22.7
percent on the year, respectively.
    The London Metal Exchange is closed for a summer bank
holiday. Trading will resume on Tuesday.

Mon Aug 29, 2011 8:05am GMT

China Bonded Copper Stockpiles Fall About 50%, Glencore Says

China Bonded Copper Stockpiles Fall About 50%, Glencore Says

 

Copper stockpiles in bonded warehouses in China, the world’s largest user of the metal, have dropped about 50 percent this year, adding to signs that demand is “strong,” Glencore International Plc said.

The decline partly reflects tighter financing conditions facing “various market participants,” Baar, Switzerland-based Glencore said in an earnings statement today. Copper has dropped 6.2 percent this year on speculation global growth is slowing, curbing demand for metals.

“Adjusting apparent demand for the significant inventory drawdowns we have seen in China during the first half 2011, one can conclude that real demand has been and continues to be strong,” Glencore said. There are “mounting risks to supply, particularly in the copper concentrate market.”

Glencore sold 17 percent less copper metal and concentrates in the first half than a year earlier, the company said in the statement. While demand for industrial metals in the U.S. and Europe was “constrained” by limited supply growth, German usage was “particularly strong,” mainly because of stronger export demand, the company said.

‘More Buying’

“We now do see more buying existing in China, which should hopefully lead to the stronger second half of 2011,” Chief Executive Officer Ivan Glasenberg said on a conference call today. While the first half of last year was “extremely robust” because of zinc and copper restocking, “we do not see the same restocking situation in the first half of 2011,” he said.

Premiums buyers are prepared to pay for aluminum are being supported by inventory financing transactions and “logistics bottlenecks,” Glencore said. The company said it will stay focused on warehousing activities.

Glencore’s first-half alumina and aluminum sales rose about 16 percent to 6.5 million metric tons.

“Market conditions in aluminum have generally been favorable,” the company said. Glencore said it will continue to seek “long-term” supply contracts with existing partners, while also seeking “new business opportunities with smelters being opened in the Gulf and elsewhere.”

Aug 25, 2011

UPDATE 1-Japan July copper cable shipments down 7.5 pct yr/yr

UPDATE 1-Japan July copper cable shipments down 7.5 pct yr/yr

 By Yuko Inoue

 Japanese copper wire and cable shipments fell 7.5 percent from a year earlier in July to the lowest on record for the month as exports halved and domestic demand shrank 5.4 percent, an industry body said on Friday.

July shipments totaled an estimated 55,100 tonnes, data from the Japanese Electric Wire and Cable Makers' Association showed, down from revised June shipments of 56,723 tonnes.

Demand for copper, used in a wide range of products from utensils and construction materials to computer chips, is often seen as a gauge of economic activity.

 

"Exports plunged, while domestic demand remained weak," an industry official said, adding that it was hard to predict future trends.

Exports of copper wire and cable plunged 51.7 percent to 1,300 tonnes during the month in the wake of a slowdown in demand in China, the world's biggest consumer, and the strong yen, now hovering near a record high against the U.S. dollar.

Domestic demand also stayed weak, with shipments for electric power companies falling 21.6 percent to 4,900 tonnes and those for the auto sector declining 11.5 percent to 5,800 tonnes.

Wire and cable shipments for the construction sector, which accounts for more than 40 percent of domestic demand, slipped 3.5 percent, their first year-on-year fall in 12 months.

Japan's business mood improved in August and is expected to brighten further as manufacturers restore output to pre-disaster levels, a Reuters poll showed, but a rising yen and slackening foreign demand have started taking their toll on exports.

Companies in the Reuters Tankan survey expressed growing concern about the currency's rise while trade data showed recovery in exports slowed markedly in July when the yen soared against a weakening dollar.

Japan's gross domestic product fell 0.3 percent in the April-June quarter after the earthquake in March, less than a median forecast for a 0.7 percent contraction and a 0.9 percent decline in January-March.

Fri Aug 19, 2011

Aluminum Waiting Times May Lengthen in Malaysia as Orders Jump

Aluminum Waiting Times May Lengthen in Malaysia as Orders Jump

Obtaining aluminum from London Metal Exchange warehouses in Johor, Malaysia, may take longer after orders to draw the metal from local stocks jumped to the highest level in more than seven years.

Orders to draw aluminum from Johor warehouses, known as canceled warrants, jumped 19,350 metric tons, or 33 percent, to 78,350 tons, the highest level since at least July 2004, exchange data showed today. That’s the second increase in four sessions after bookings climbed 32 percent on Aug. 12.

The number of canceled warrants for all metals at the location is now 103,000 tons. At the minimum daily delivery rate of 1,500 tons set by the LME, removing any metal from LME warehouses in Johor may take as much as 14 weeks, according to Duncan Hobbs, an analyst at Macquarie Group Ltd. in London.

“People have been waiting for metal in some cases a little longer than they would have hoped,” Hobbs said. “But clearly, the queuing situation is not as critical there as in Detroit.” It takes about seven months to withdraw metal from LME warehouses in Detroit, home to 25 percent of total aluminum stockpiles, Harbor Intelligence estimated in July.

Canceled warrants for aluminum in Johor more than quadrupled in July. Johor is home to 273,700 tons of aluminum stockpiles. Local inventories have fallen 13 percent since peaking on June 3.

The bookings at Johor are linked to “repositioning of metal, not any sudden spike in demand,” according to Hobbs. Owners of LME warrants may be moving metal from one warehouse location to another, or placing it in warehouses not approved by the LME to benefit from lower rent, the analyst said.

Aug 17, 2011

METALS-Copper rises, boosted by equities

METALS-Copper rises, boosted by equities

By Carrie Ho

    SHANGHAI, Aug 15 (Reuters) – Copper rose on Monday, as Asian
shares continued a rally from last week on more positive
economic data.
    Investors returned to pick up bargains, but broader markets
remained fragile ahead of a key Franco-German summit which may
offer a solution out of the spreading debt crisis.
    Three-month copper on the London Metal Exchange rose
1 percent to $8,950.50 a tonne by 0700 GMT, after losing 0.2
percent in the previous session.
    The most-active October copper contract on the Shanghai
Futures Exchange rose 1.3 percent to 67,300 yuan per
tonne by the close, after falling 0.4 percent in the last
session.  
    "The Chinese copper market has been stable partly due to a
calm external market and partly supported by a rebound in
equities," China Futures Co analyst Yang Jun.
    "Although the sentiment is largely positive, I wouldn't say
that there is huge demand for copper now. Users are still
spooked by the previous routs and are mindful of the systemic
risks still lurking."
    U.S. data on Friday was a mixed bag. Retail sales posted the
biggest gain in four months in July, but consumer sentiment fell
to the lowest level in more than three decades in early August.

    Japan's economy contracted at a slower pace than expected in
the second quarter as output and exports recovered from the
deadly earthquake in March, but a soaring yen and slowing global
growth cloud the outlook for an economy emerging from recession.
   
    China's central bank said on Friday it aimed to keep the
currency exchange rate relatively stable, but the pronouncement
did little to quiet speculation that Beijing would allow swifter
yuan appreciation to help stem inflation.
    Besides expectations of cheaper dollar-denominated imports
into China, this also raised hopes of less need to resort to
tightening measures such as the raising of interest rates.
    The euro and dollar rose to their highest level in two weeks
against the Swiss franc in Asia on Monday on caution the Swiss
National Bank would act further to weaken the franc and as
markets found a steadier footing. 
 

Mon Aug 15, 2011 8:03am GMT

 

Copper May Rise, Reduce Weekly Drop, as Lower Prices Draw in More Buyers

Copper May Rise, Reduce Weekly Drop, as Lower Prices Draw in More Buyers

Copper may rise in New York, reducing a second weekly drop, as lower prices stoke demand by attracting buyers.

Copper reached an eight-month low on Aug. 9 as commodities and equities plunged after the U.S. lost its AAA credit rating at Standard & Poor’s. Shares climbed in Europe today after the European Securities and Markets Authority said yesterday Belgium, France, Italy and Spain plan to impose a ban on short selling or short positions in an effort to restore investor confidence. Short positions are bets on lower prices.

“The market is probably receptive to fresh stimuli to move higher, because it’s a much cleaner market” after selling this week, said Steve Hardcastle, head of client services for industrial commodities at Sucden Financial Ltd. in London. “In euros, the prices are extremely cheap, and that has drawn some activity from Europe,” with buyers from China also active recently, he said.

Copper for September delivery added 0.75 cent, or 0.2 percent, to $4.016 a pound by 7:34 a.m. on the Comex in New York. Prices are down 2.5 percent this week. Copper for three- month delivery rose 0.1 percent to $8,890 a metric ton on the London Metal Exchange.

Concern that supply may fall short of demand helped to limit declines this year. Citigroup Inc. said global copper production was 4.3 percent below its estimates in the first quarter, and 3.4 percent less than the second-quarter forecast. Rio Tinto Group, BHP Billiton Ltd. and Vale SA reported declines in copper output in the second quarter.

Focus on Supply

“Falling production could further increase the strain on the market in the second half, as current global economic turbulence subsides and investors refocus their attention on the variables of supply and demand,” Citigroup analyst Heath R. Jansen said in a report today.

The MSCI World (MXWO) Index of shares is down 1.6 percent for the week, rebounding from a retreat of as much as 6.8 percent.

“The market is extremely volatile and extremely nervous,” Sucden’s Hardcastle said. “It is being influenced very heavily by the activity on the equities markets. We’ve had a hectic week, to say the least.”

Copper rose the most since November on the LME yesterday as China’s currency strengthened past 6.4 yuan per dollar for the first time in 17 years. Officials in the country, the top global copper user, are letting the currency appreciate as slowing growth and gyrations in global currencies and stock markets threaten to spark a new recession. The yuan has climbed 0.7 percent this week, the most since December 2007.

Tin for three-month delivery on the LME gained 3.4 percent to $24,400 a ton. Shipments of refined metal from Indonesia, the world’s largest tin exporter, fell to 9,265.72 tons in July from a month earlier, the Trade Ministry said Aug. 9.

Aluminum, lead and zinc rose in London, while nickel was unchanged.

Aug 12, 2011 8:08 AM ET

Commodities Rebound From Eight-Month Low on Fed’s Low Interest-Rate Pledge

Commodities Rebound From Eight-Month Low on Fed’s Low Interest-Rate Pledge

 
Aug. 10 (Bloomberg) — Jason Schenker, president of Prestige Economics LLC in Austin, Texas, talks about the outlook for crude oil. Schenker, who also discusses the U.S. economy and Federal Reserve monetary policy, speaks with Susan Li on Bloomberg Television's "First Up." (Source: Bloomberg)

Crude oil and copper paced a rebound in commodities from an eight-month low after the Federal Reserve pledged to keep its benchmark interest rate at a record low for a further two years to bolster the economy, boosting stocks.

The S&P GSCI Spot Index of 24 commodities surged as much as 2.5 percent to 629.64, the most since July 7. The gauge fell to 598.46 yesterday, the lowest level since Dec. 2. Oil jumped as much as 4 percent after falling to a 10-month low yesterday and copper gained as much as 3.1 percent, the first rise in six days.

“Commodities are tracking equities,” Mark Pervan, head of commodities research at Australia & New Zealand Banking Group Ltd., said today by phone from Melbourne. “Commodities’ fundamentals, both in supply and demand, are stronger than equities anyway, and that created propensity to buy on dips.”

The Fed’s decision yesterday represents its biggest effort since November to revive confidence while stopping short of a third round of asset purchases after Standard & Poor’s cut the rating of the U.S.’s long-term debt last week. The Federal Open Market Committee is “prepared to employ” extra tools to bolster an economy hobbled by weak hiring, it said yesterday.

U.S. stocks rallied by the most in more than two years yesterday after the Fed’s statement and those in Asia climbed for the first day in seven today. The MSCI Asia Pacific Index climbed 2.3 percent as of 3:05 p.m. in Tokyo.

Commodities also gained as China, the top buyer of copper and aluminum, may join Asian nations from South Korea to India in delaying interest-rate increases in a bid to help stabilize financial markets, according to Bloomberg News surveys.

Chinese Rates

The People’s Bank of China will leave borrowing costs unchanged for the rest of this year, according to eight of 10 analysts surveyed yesterday. Economists’ median forecast is for South Korea to extend a pause for a second month tomorrow, while Indonesia left the interest rates unchanged yesterday.

Crude oil for September delivery climbed 2.8 percent to $81.55 a barrel at 7:37 a.m. in London. Oil was also supported by a report from the American Petroleum Institute that showed inventories declined by the most since June.

Still, the rally in commodities may not be sustained as concerns persist that the recovery in global economy may falter, according to Brenton Saunders, who helps to manage $1 billion at Sydney-based Taurus Funds Management Pty.

“We haven’t fixed any of the problems yet, and it’s hard to imagine that the uncertainties will go away any time soon,” Saunders said by phone today. “The Fed statement is very unsurprising and guarded. If they did have more flexibility to fix the economy they would have said more.”

Gold Gains

Gold gained for a fourth day as the Fed’s pledge to keep interest rates low boosted demand for the metal as a haven. Immediate-delivery bullion, which climbed to a record $1,780.10 an ounce yesterday, traded 0.7 percent higher at $1,751.95.

“As long as rates stay low, particularly U.S. dollar, it will help to support gold, if not push it higher,” Darren Heathcote, head of trading at Investec Bank (Australia) Ltd., said by phone from Sydney.

Copper for delivery in three months gained as much as 3.1 percent to $9,005 per metric ton, the biggest increase since June 14. Nickel climbed as much as 4 percent to $22,050 a ton, most since April 20.

Wheat for December delivery gained 1.9 percent to $7.175 per bushel on the Chicago Board of Trade. Corn for December delivery advanced 1.2 percent to $6.97 a bushel and soybeans increased 1.1 percent to $13.145 a bushel.

 – Aug 10, 2011 3:36 AM ET

Copper Falls, Caps Biggest Weekly Drop Since June 2010 on Growth Concerns

Copper Falls, Caps Biggest Weekly Drop Since June 2010 on Growth Concerns

Copper futures fell in New York, capping the biggest weekly slump since June 2010, on concern that the faltering global economy will curb demand for industrial metals.

Copper declined for the fifth straight day as a report showing U.S. employers in July added more jobs than forecast failed to ease concern that the nation will slip into another recession. All six base metals traded on the London Metal Exchange dropped, with lead and zinc falling more than 5 percent and tin had the biggest weekly drop in two years.

“Sentiment has become king, and perceptions of the macro outlook have taken a turn for the worst,” Gayle Berry, an analyst at Barclays Capital in London, said in a report. “The metals were by far the worst affected of the commodity sectors.”

Copper futures for September delivery slid 11.85 cents, or 2.8 percent, to close at $4.117 a pound at 1:24 p.m. on the Comex in New York. Earlier, the price reached $4.0795, the lowest for a most-active contract since June 28. The metal tumbled 8.1 percent this week.

The U.S. economy expanded less than economists estimated in the second quarter, and first-quarter growth was revised lower, government figures showed last week. European services and manufacturing growth eased last month to the slowest pace in almost two years, a report showed on Aug. 3.

“There is a lot of disappointing macro data coming out of the U.S.,” Angus Staines, an analyst at UBS AG in London, said in a telephone interview. “As the market changes its sentiment toward an expectation for worse data, we’ll continue to see that being priced into commodities.”

On the London Metal Exchange, copper for delivery in three months fell $314, or 3.4 percent, to $9,041 a metric ton ($4.10 a pound).

Tin fell $1,155, or 4.5 percent, to $24,350 a ton. Earlier, the metal touched $23,165, the lowest since Sept. 22. This week, the price dropped 13 percent, the most since July 2009.

Aluminum dropped $74, or 3 percent, to $2,402 a ton after reaching $2,400, the lowest since Jan. 27. The metal fell 8.5 percent this week, the most since December 2008.

Nickel, zinc and lead also declined.

Copper falls as U.S. growth uncertainty lingers

Copper falls as U.S. growth uncertainty lingers

 By Harpreet Bhal
    LONDON, Aug 3 (Reuters) – Copper fell to a three-week low on Wednesday on
growing concerns that efforts by the United States to cut spending will hinder
growth in the world's largest economy and hurt demand for metals, but supply
uncertainty helped limit further falls as a strike at Chile's Escondida mine
entered its 13th day.
    Benchmark copper on the London Metal Exchange fell to touch
$9,524.50 a tonne, its lowest level since mid-July, after data showed the number
of planned layoffs at U.S. firms rose to a 16-month high in July.
    The metal used in power and construction traded at $9,570 in official rings
from a close of $9,680 a tonne on Tuesday.
    Agreement by lawmakers on a last-gasp deal to raise the U.S. borrowing
capacity and avoid a debt default failed to bring much relief as investors
focused on the implications of tighter fiscal policy on U.S. growth.
    Data earlier in the week showed U.S. manufacturing grew at its slowest pace
in two years in July, raising fears over the pace of recovery in the world's
largest economy and prompting concerns about demand for base metals.

    "The recent disappointing economic numbers from the U.S. are weighing on
prices and risk aversion is high among market players. Economic data will be
closely watched this week," said Daniel Briesemann, analyst at Commerzbank.
    U.S. non-farm payrolls data, used as a key gauge of economic health and due
on Friday, is expected to show its economy added 85,000 jobs in July after
growing by just 18,000 in the previous month.
    Supply concerns, however, helped limit further falls in copper as
negotiations between union officials and Chile's Escondida mine owner BHP
Billiton stretched into a second day on Wednesday
    The strike at Escondida has stoked fears of contagion to other mines,
fanning global supply fears, some analysts say.
    "Some in the copper industry fear that if BHP agrees to demands for a higher
bonus at Escondida, workers at other mines in Chile could follow suit with
similar demands," ANZ said in a note.
    Markets are closely watching developments in the euro zone debt crisis, with
caution prevailing as five-year Italian bond yields reached the same level as
Spain's, in a sign Rome is overtaking Madrid as a key focus of investors'
concern about debt sustainability. 
    Analysts at RBC said copper could break below the $9,600 a tonne mark in the
short-term, with any weakness presenting a buying opportunity for investors.
    "Copper has seen a good support base around $9,600 for the past three weeks,
but we think a test and break of that support line is inevitable in the short
term. $9,000 is the next obvious line of support in the charts below that and we
think any test of that level should be treated as a buying opportunity."
 


Wed Aug 3, 2011 12:24pm GMT
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