Mar

11

METALS-Copper falls on China output data..

March 11, 2010 | Leave a Comment

* LME copper turns lower, ShFE falls 1.5 pct on China
output
* China may be less dependent on LME supply; still big
buyer
* Tightening worries but analysts doubt will dent metals
much
* Coming up: Weekly US jobless claims and international
trade

SINGAPORE, March 11  - Copper prices fell on
Thursday after production data suggested the world’s biggest
buyer may be less dependant on the international market for
supply.
Chinese output data on Thursday, a day after very strong
import numbers, showed domestic copper production rising 16.2
percent in the first two months of the year, to 702,000 tonnes.
Aluminium output in February alone jumped almost 50 percent
from a year ago to 1.308 million tonnes or 46,714 tonnes per
day. Output in January was 1.262 million tonnes or 40,710 on a
daily basis.
For graphics showing Chinese copper and aluminium output,
click:
here
here
“This is confirmation capacity is coming back on line in
response to the perception of stable, higher prices,” Ben
Westmore, commodities economist at National Australia Bank
said.
“Greater domestic production means China is less reliant on
imports. The market can over react to this kind of news, but if
you look beyond the next week, China will remain a strong
source of demand for metals so I am still reasonably bullish.”
London Metal Exchange prices fell when the data was
released, turning a $10 rally into a $30 loss.
Three-month copper on the London Metal Exchange CMCU3
fell $29 to $7,411 a tonne by 0316 GMT. Before the data copper
traded around $7,450 and had touched $7,464 earlier int eh day.
Benchmark third-month Shanghai copper SCFc3 fell 1.5
percent to 59,490 yuan.
But analysts said the outlook remained bright for base
metals.
Westmore said copper prices would average $7,500 in the
last quarter of the year versus $7.120 so far in this quarter.
Tuesday’s trade numbers showed strong Chinese imports of
industrial metals and boosted confidence in the demand outlook.
Yingxi Yu, analyst at Barclays Capital said: “The Chinese
trade data was very constructive, not just for copper but for
iron ore, oil and coal and it shows that despite the concerns
about China’s macro tightening, demand is still strong.”
For the full story on trade and output,
Yu added: “There is some scepticism about OECD demand but
LME inventories have shown broad-based falls and are perhaps
offering an early sign the market is improving on a fundamental
basis.”
LME copper stocks have fallen for the past six session
equalling a run of drawdowns last July. But traders worry that
the limited arbitrage opportunities since the Chilean
earthquake and a decline in the cancelled warrant ratio may
mean a halt to the trend.
For a graphic on the arbitrage, click:
here
Aluminium CMAL3 fell $12 to $2,220.
MAB’s Westmore said: “The market is wary of the big LME
stocks and the perception is the fundamentals are weak compared
to other metals. China imports have fallen after last years
spikes.
“There is room for some short-term moderation. Remember
prices haven’t done much in the past few weeks and I think
there is a feeling to wait and see what policy tightening will
have on demand.”
Chinese consumer inflation rose more than expected in the
year to February, while retail sales data for the first two
months showed the economy started 2010 with a strong head of
steam.
Coming a day after the surprisingly strong export and
import data, the figures could reinforce the case for further
monetary tightening even as central bank data showed the pace
of credit growth halved in February.
For a graphic on inflation:
here
Base metals prices at 0316 GMT
Metal Last Change Pct Move End 2009 YTD pct
chg
LME Cu 7411.00 -29.00 -0.39 7375.00
0.49
SHFE Cu* 59490.00 -910.00 -1.51 59900.00
-0.68
LME Alum 2220.00 -12.00 -0.54 2230.00
-0.45
SHFE Alum* 16745.00 -155.00 -0.92 17160.00
-2.42
COMEX Cu** 335.00 -0.50 -0.15 332.75
0.68
LME Zinc 2331.00 -45.00 -1.89 2560.00
-8.95
SHFE Zinc 18680.00 -495.00 -2.58 21195.00
-11.87
LME Nickel 21350.00 -170.00 -0.79 18525.00
15.25
LME Lead 2260.00 -29.00 -1.27 2432.00
-7.07
LME Tin 0.00 -17750.00 -100.00 16950.00
-100.00
LME/Shanghai arb^ -306
Dollar/yuan 6.8256 \ 6.8266
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month


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