METALS-LME copper retreats from two-week high

METALS-LME copper retreats from two-week high

 
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By Carrie Ho

    SHANGHAI – London copper slipped 1.7
percent on Thursday on lingering worries over the euro zone
crisis and uncertainties ahead of key Chinese data this week
also weighing on base metals.
    Three-month copper on the London Metal Exchange fell
to $7,403.25 a tonne by 0703 GMT, after touching $7,544.75 in
the previous session, its highest since Sept. 28, before closing
3.2 percent higher.
    LME copper has risen 7.2 percent from the start of the month
until Wednesday's close, after losing a quarter of its value in
the three months through Sept. 30.
    The most-active December copper contract on the Shanghai
Futures Exchange SCFc3 closed 0.1 percent lower at 54,880 yuan
($8,630.966) per tonne.
    Despite a pick-up in copper buying for immediate use by
Chinese consumers in recent weeks, speculators are selling based
on fears of a gloomy global economic climate.
    "Speculators, both overseas and in China, are more inclined
to short base metals today, especially copper, as the price of
the metal is still far above its marginal costs, which means
there is more downside room in a bear market," said a
Shanghai-based trader.
    Analysts put copper's current marginal costs at $4,000.
    A Chinese industry group has told copper experts the
country's stocks reached a surprisingly high 1.9 million tonnes
at the end of last year, the Financial Times reported on
Wednesday, citing unnamed sources.
    The source for the figures, the China Non Ferrous Metals
Industry Association, has since confirmed those stockpile
numbers to Reuters. But analysts said this would not dampen
copper's outlook.
    "The figures are not surprising to me, since the import
numbers were quite low earlier this year, and all signs point to
the fact that China had been drawing down from this high
stockpile for most of the year. I believe that we have only 40
percent of those stocks left," Jinrui Futures analyst Zhao Kai
said.
    Data showed that China's imports of copper rose 11.8 percent
to 380,526 tonnes to a 16-month high in September from the
previous month.
    Analysts said this was due to favourable arbitrage and spot
premiums, as well as steady prices in August, which encouraged
forward orders for delivery in September.
    The euro zone's debt crisis continues to weigh on sentiment
despite efforts to straighten out the region's finances and
recent positive news.
    The bloc is set to ask banks to accept losses of up to half
on their holdings of Greek debt as part of a plan to avert a
disorderly default and stem a crisis that threatens the world
economy.
    Euro zone industrial production was much stronger than
expected in August, data showed on Wednesday, indicating the
economic slowdown in the third quarter might be smaller than
feared.
    Italy is set to pay lower yields when it sells up to 6.5
billion euros of bonds on Thursday, with growing optimism that
European leaders are responding more effectively to the euro
zone debt crisis outweighing two rating downgrades in less than
a week.
    In industry news, Chile's state copper giant Codelco
said on Wednesday it secured a $6.75 billion bridging
loan from Japan's Mitsui & Co, enabling it to exercise
an option to buy a 49 percent stake in Anglo American Sur.

Thu Oct 13, 2011 7:38am GMT