Dec

7

Copper steady on econ hopes, shakes off dlr impact.

December 7, 2009 | Leave a Comment

SHANGHAI  – Shanghai copper edged lower on Monday, following a retreat in London prices in the previous session and weighed by a strong dollar, but an upbeat economic outlook is expected to underpin investors’ sentiment and keep prices lofty.

 

U.S. employers cut far fewer jobs than expected last month, and the umemployment rate dropped to 10 percent from 10.2 percent in October, bolstering hopes that a sustainable recovery was building.

 

The dollar edged lower against a basket of major currencies, after jumping 1.7 percent on Friday, its biggest one-day performance since mid-December last year.

 

“There had been expectations on a rebound in the dollar. Now the time bomb has exploded, but prices haven’t retreated,” said Zhu Yanzhong, an analyst at Jinrui Futures.

 

“Prices of metals, with the exception of gold, have been pretty much unscathed. It means that speculators still want to push prices higher.”

 

But Zhu warned the dollar rebound might not be a one-day show.

 

“Base metals prices will be under pressure to retreat once investors see the rebound continue,” he said.

 

Shanghai’s benchmark third-month copper futures contract edged down 0.3 percent to 55,550 yuan a tonne by 0226 GMT. It hit 55,850 yuan last week, its highest since Sept 12, 2008.

 

The most-active contract for March delivery fell 0.3 percent to 55,780 yuan a tonne.

 

Three-month copper on the London Metal Exchange was flat at $7,040 a tonne, after hitting its highest level since late September last year.

 

“The general trend is still pointing upward, even though December is traditionally a month with lower buying interest and price consolidation,” said Li Rong, an analyst at Great Wall Futures.

 

Chinese leaders began a key annual conference on Saturday to map out economic policies for next year, and are expected to stick to a loose monetary stance and active fiscal policy.

 

“Worries that the Chinese government would tighten up monetary policy in the short term have been eliminated. Everyone, from government or private sector, is bullish on next year,” said a Shanghai-based trader.

 

“Once prices edge lower, buying interest grows. In general, the market is optimistic, although we will see technical corrections.”

 

Among other metals, LME aluminium fell $11 to $2,135 a tonne, after posting a 6.5 percent gain last week. Shanghai aluminium was flat at 15,750 yuan.

 

Premiums for physical aluminium are rising in Europe on tightened supply, as much of the record high inventory in LME is tied up in financing deals that are not likely to suddenly be unwound.


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