METALS- Copper down on Greek default worries
By Silvia Antonioli
Copper fell more than 2 percent on
Thursday as escalating worries about a Greek sovereign debt
default and a Euro collapse darkened market sentiment,
offsetting supply deficit concerns.
Benchmark copper on the London Metal Exchange fell
about 2 percent to $7,760.25 a tonne by 0930 GMT from $7,885 at
the close on Wednesday, when it rose about 2 percent.
Earlier, it hit a session low of $7,673 per tonne.
The metal used in power and construction rose by about 15
percent in the last 30 days but is still about a quarter down
from a record high of $10,190 a tonne hit on February.
"Today the escalating debt crisis in the Euro zone is
weighing on all commodities; the EU has frozen payments to
Greece and if Greek people say no at the referendum Greece is
bankrupt," Commerzbank analyst Daniel Briesemann said.
"The fundamentals should support copper and other metals:
inventories have been falling across the board lately, Chinese
imports are healthy and cancelled warrants have been rising but
commodity markets at the moment are almost ignoring
fundamentals. They are politically-driven."
The leaders of Germany and France told Greece on Wednesday
it would not receive another cent in European aid until it
decides whether it wants to stay in the euro zone.
Greece could face bankruptcy if the population ends up
voting against the European Union's latest financial aid package
in a referendum, the chairman of the Eurogroup countries said on
European leaders were preparing for the possibility of
Greece leaving the euro zone to preserve the 12-year-old single
A stronger dollar against a basket of currencies was also
weighing on metals.
A stronger dollar makes dollar-priced commodities such as
metals costlier for holders of other units.
From a fundamental point of view things looked brighter.
Declining copper ore grades and strike actions at some of
the largest copper mine have cut supply significantly this year.
Freeport McMoRan Copper & Gold's massive Grasberg
mine in Indonesia is producing copper at 5 percent of its full
capacity, a senior official at the energy and mineral resources
Also a decline in metals stocks and a rise in cancelled
warrants in the last few weeks underlined
demand for industrial metals was still robust.
Copper inventories in LME-monitored warehouses
fell by 1,150 tonnes to 422,125 tonnes, the lowest since
February, latest data showed. Inventories have fallen by about
10 percent in the last 5 weeks.
"If we look at industrial metals' specific fundamentals, we
find that they are mostly positive for prices," Credit Suisse
said in research note.
"For instance, inventories of aluminum, copper, nickel,
tin and even zinc have continued to fall. Availability is
deteriorating... This positive fundamental backdrop contrasts
the prevailing uncertainty regarding the economic outlook and
the policy measures surrounding the European debt crisis."
In other metals, aluminium was at $2,138 from $2,127
at the close on Wednesday and zinc , used to
galvanize steel, was at $1,918.75 from $1,927
Battery material lead was at $1,999.75
from $2,024; tin was at $21,875 from $22,000 and
nickel was at $18,550 from $18,580.
Nov 3, 2011