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Monthly Archives: February 2012

METALS-Copper pushes higher with broader risk assets

METALS-Copper pushes higher with broader risk assets

   
By Chris Kelly and Maytaal Angel 

    
 

 Copper erased earlier losses to
end higher on Monday, buoyed by positive momentum in other risk asset markets, a
drop in the price of crude oil, and strengthening technical signals that could
keep prices heading higher in the days ahead.
    Volumes were active at the start of the week as the market gyrated above and
below the unchanged level in early dealings, reacting to weaker European markets
and the persistent concerns about European debt, as well as fresh worries about
higher oil prices and the impact they could have on an already fragile global
economic recovery.
    But copper's late-session move into positive territory held with the help of
a similar reversal in U.S. equities that allowed prices of the red metal regain
footing above the 200-day moving average, a key level of technical resistance
that has acted as both a line of support and an upside barrier for the better
part of February.
    "That has been a significant line on the sand," Ralph Preston, futures
analyst with HeritageWestFutures.com in San Diego, California, said of the
200-day, which came in at around the $3.83 level.
    "We're now pushing $3.89 … anything over $3.88 today is projecting a move
to $3.95."
    London Metal Exchange (LME) benchmark copper rose $5.50 to end at
$8,536 a tonne.
    In New York, the most-active May COMEX contract settled up 1.90 cents
at $3.8890 per lb, near the upper end of its $3.8315 to $3.8965 session range.
   

    Trading volumes tipped 82,500 lots in late New York business, nearly 20
percent above the 30-day norm, according to preliminary Thomson Reuters data.
    The day began with more selling tied to the festering debt crisis in Europe
after a weekend meeting of the Group of 20 leading economies failed to reach
agreement on making more funds available to Europe and said EU leaders must
commit more money to fight the debt crisis at their summit this week.
    The comments piled pressure on Germany to drop its opposition to a bigger
European bailout fund.
    "We had a good run-up last week after the Greek bailout was agreed but the
markets are now shifting their focus towards the debate over the size of the
European fund," said metals analyst Edward Meir at INTL FCStone.
    "It is also important to keep an eye on Brent oil prices; as it has
got the potential to slam all other commodities. If it moves $10 higher it
starts to become quite serious because you get inflationary pressures and rising
input costs for metals."
    Rising oil prices, which touched 10-month highs last week on worries over
disruption to Middle East supplies, stirred the spectre of global recession,
with Europe having the most to fear as its brittle economy falters.
    But copper pushed higher with bullish investors flagging support from a
tighter supply outlook, highlighted by another stoppage at the Grasberg mine in
Indonesia.
    Freeport McMoRan Copper & Gold Inc.'s has told workers at the mine
not to work due to safety concerns linked to labour unrest, a union official
said on Sunday.
    "The supply side is very strained; we are not getting more material out but
the focus currently remains on demand," Meir said.

 

Copper Tumbles to Three-Week Low as Industrial Metals Decline

Copper Tumbles to Three-Week Low as Industrial Metals Decline

 
 
 
 

 
 

Copper dropped to the lowest level in more than three weeks after Europe postponed a decision on a second Greek bailout, spurring concern the nation may default. Aluminum, zinc and lead fell.

Three-month copper retreated as much as 1.6 percent to $8,233 a metric ton, the lowest price since Jan. 23 on the London Metal Exchange, and traded at $8,267.75 by 3:55 p.m. Shanghai time. The contract retreated for a fifth day and was poised for the longest losing run since November. May-delivery on the Comex lost 1.1 percent to $3.7665 a pound.

Concern Greece will miss a debt payment next month grew as a decision on 130 billion euros ($171 billion) of aid was postponed until at least Feb. 20 and possibly until a full-time Greek government emerges from elections later this year.

“Copper is suffering a double whammy from the delay of an effective resolution in Europe and weak Chinese demand,” said Li Ye, an analyst at Shanghai Jiuheng Futures Co. The metal gained 9.5 percent in January, ending a two-month decline.

World copper production exceeded demand by 69,100 tons last year, compared with a shortage of 175,000 tons in 2010, the World Bureau of Metal Statistics said yesterday. The May- delivery contract on the Shanghai Futures Exchange closed 2 percent lower at 59,210 yuan ($9,395) a ton.

Peru’s largest copper producers, including Freeport-McMoRan Copper & Gold Inc., Southern Copper Corp. and Xstrata Plc, face the risk of blackouts next year because of power line delays in the southern Andes, Mark Hoffmann, vice president at the National Society of Mining, Petroleum & Energy, said in an interview in Lima.

On the LME, aluminum fell 1.1 percent to $2,175 a ton, zinc dropped 0.9 percent to $1,993.50 a ton and lead lost 1.4 percent to $2,032.75 a ton. Nickel declined 0.7 percent to $19,945 a ton and tin retreated 0.8 percent to $24,400 a ton.

Feb 16, 2012 3:09 AM ET

China Copper Imports May Remain Robust on Stock Build

China Copper Imports May Remain Robust on Stock Build

 
 

Copper imports by China, the largest user, may remain robust in coming months as traders build stockpiles closer to consumers to cash in on arbitrage opportunities, said Australia & New Zealand Banking Group Ltd.

Merchants have been increasing inventories at exchange and bonded warehouses to quickly benefit from arbitrage windows between Shanghai and London, which close quickly, and to meet the growing tendency for consumers to live hand-to-mouth, said Nick Trevethan, the bank’s senior commodities strategist in Singapore.

An increase in copper imports may fuel the metal’s 11 percent gain this year in London, after shipments declined for the first time in eight months in January from a record the previous month. Inventories (SHFCCOPD) monitored by the Shanghai Futures Exchange rose last week to the highest ever.

“China’s imports may continue at comparatively high levels for next few months, even if there’s very little financial motivation in terms of a profitable arbitrage window right now,” said Trevethan.

China’s imports of the refined metal, copper alloy and products dropped to 413,964 metric tons in January, the customs agency said Feb. 10. This compares with a record 508,942 tons in December.

Inventories monitored by the Shanghai bourse jumped by more than threefold to 198,202 tons from a 27-month low of 57,655 tons on Dec. 1, bourse data showed Feb. 10.

London Metal Exchange stockpiles fell 19 percent to 313,500 tons in the same period, exchange data showed. LME stockpiles touched a 29-month low of 312,750 tons on Feb. 10. Stockpiles in Asia shrank 60 percent to 24,475 tons during the period.

Copper for three-month delivery dropped 0.4 percent to $8,395.50 a ton on the LME at 3:04 p.m. in Tokyo.

Destocking Cycle

Stockpiles within China may not be large enough to allow a long destocking cycle, Morgan Stanley said in a Feb. 8 note. The bank estimated stockpiles at bonded warehouses in China at near 350,000 tons, compared with 750,000 tons in early 2011.

About 300,000 tons of copper was probably added to bonded warehouses and merchant inventory in China in the fourth quarter and stockpiles likely continued to expand this year, Barclays Capital said in a Feb. 7 report.

Feb 14, 2012

Oil Declines on European Economic Concern; Brent Premium Rises

Oil Declines on European Economic Concern; Brent Premium Rises

 
 
 
Oil fell from the highest price in three days in New York on speculation Greece’s steps to avert a financial collapse may fall short, threatening Europe’s economy and demand for fuel.

Futures dropped as much as 0.9 percent before political leaders in Greece meet today to discuss a detailed agreement for meeting the terms of an international financial rescue. The premium of London-traded Brent oil to New York contracts rose for an eighth day after militants in Nigeria, Africa’s biggest crude producer, attacked and damaged a pipeline.

“The potential now is for disappointment out of Europe,” said Michael McCarthy, a chief market strategist at CMC Markets Asia Pacific Pty in Sydney. “I suspect this one is going to drag on a fair bit. This echoes the very disappointing rhetoric we’ve heard out of Europe many times before.”

Crude for March delivery slid as much as 89 cents to $96.95 a barrel in electronic trading on the New York Mercantile Exchange and was at $96.97 at 4:32 p.m. Singapore time. The contract rose $1.48 to $97.84 on Feb. 3, the highest settlement since Jan. 31. Prices are down 1.9 percent this year.

Brent oil for March settlement on the London-based ICE Futures Europe exchange dropped as much as 68 cents, or 0.6 percent, to $113.90 a barrel. The European benchmark contract was at a premium of $17.06 to New York-traded West Texas Intermediate, the widest since Nov. 8. The spread was a record $27.88 on Oct. 14.

Greece Talks

Greece’s interim Prime Minister Lucas Papademos and the three party leaders backing his government will meet at about midday, a spokeswoman from the premier’s office said today by telephone. The parties aim to provide a detailed response to the European Union, European Central Bank and International Monetary Fund on economic measures to meet the requirements for a 130 billion-euro ($170 billion) aid package.

“The market is not that confident that all is good,” in Europe, said Jonathan Barratt, chief executive of Barratt’s Bulletin, a commodity markets newsletter in Sydney. “We might get some clarification. We really have to wait and see.”

The 27 member states of the EU accounted for 16 percent of global oil demand last year, according to BP Plc’s annual Statistical Review of World Energy.

In Nigeria, the Movement for the Emancipation of the Niger Delta said it carried out a Feb. 4 attack on a pipeline belonging to a unit of Italy’s Eni SpA in the country’s oil-rich south. About 4,000 barrels a day of production was lost, the Rome-based company said in an e-mailed statement yesterday.

Israel, Iran

Attacks by militant groups in the delta cut Nigeria’s output by more than 28 percent from 2006 to 2009, according to data compiled by Bloomberg. The nation, a member of the Organization of Petroleum Exporting Countries, produces low- sulfur crude similar to Brent.

Brent’s premium also widened on concern supplies will be disrupted from Iran, the second-biggest OPEC member. Israeli Foreign Minister Avigdor Liberman traveled to the U.S. yesterday to discuss security matters including an EU decision to place sanctions on Iranian oil exports. The Persian Gulf nation has threatened to shut the Strait of Hormuz, a transit route for about a fifth of the world’s oil, in response to an embargo.

Israeli Defense Minister Ehud Barak said Feb. 2 the country must consider conducting “an operation” to halt Iran’s nuclear program. U.S. President Barack Obama said in an NBC television interview yesterday he doesn’t think Israel has decided what to do about Iran and that military activity in the Persian Gulf would have a “big effect” on oil prices.

“Brent seems to be more sensitive to tensions regarding the European oil embargo” and tension between Israel and Iran, Stephen Schork, president of Schork Group Inc., a consultant in Villanova, Pennsylvania, said in an e-mailed note today.

Technical Support

Oil’s advance in New York is stalling as the moving average convergence-divergence indicator slips below zero for the first time in about seven weeks, signaling weakness, according to data compiled by Bloomberg. Futures have technical support along the 200-day moving average at $94.87 a barrel today. Buy orders tend to be clustered near chart-support levels.

Crude may fall this week as declining U.S. demand pushes up inventories, based on a Bloomberg News survey. Fourteen of 34 analysts and traders, or 41 percent, forecast futures will drop through Feb. 10. The country’s petroleum demand declined to 17.7 million barrels a day in the week ended Jan. 27, the lowest since May 1999, the Energy Department reported Feb. 1.

“That weakness in U.S. demand seems to be the only major negative on the oil market at the moment,” CMC’s McCarthy said.

Hedge funds cut bullish bets on oil by 1.4 percent in the week through Jan. 31, according to data from the U.S. Commodity Futures Trading Commission.

Feb 6, 2012

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