METALS-Copper falls heavily on weak US jobs, factory data

Thu Aug 19, 2010 10:11pm BST

 * US jobless claims' surprise jump suggests slower growth
 * Contracting factory data spurs worries over metal demand
 * China data possibly more important than U.S. for metals
 * Aluminium cash to 3-month contango narrows to about $2/T
 (Recasts with New York closing prices)
 By Carole Vaporean and Michael Taylor
 NEW YORK/LONDON, Aug 19 (Reuters) - Copper prices fell from
a two-week high on Thursday after a surprise surge in jobless
claims data and a slide in regional factory activity in the
United States stoked concerns about global demand for
industrial metals.
 In the aluminium market, significant long positions
amounting to 30 to 40 percent of warrants on London Metal
Exchange stocks and cash contracts attracted attention by
market participants. [ID:nLDE67H16C]
 Benchmark copper CMCU3 on the LME closed at $7,309 a
tonne from $7,390 on Wednesday. The metal used in power and
construction earlier touched $7,496 a tonne, its highest since
Aug. 5.
 In New York, copper for September delivery HGU0 finished
down 3.10 cents, or 0.93 percent, at $3.3185 per lb on the
COMEX metals division of the New York Mercantile Exchange. The
early range ran up to $3.39, its highest since Aug. 9.
 Copper prices gained early as the euro firmed and investors
anticipated a raft of stronger U.S. economic reports. But when
instead they came in sharply lower, copper swiftly turned
down.
 "Copper came off in response to jobless claim, Philly Fed,
leading indicators. But I would say there is still some
support," said metals analyst Justin Lennon at Mitsui Bussan
Commodities (U.S.A.).
 First, new claims for unemployment benefits in the world's
largest economy unexpectedly climbed to a nine-month high last
week, though a sizable decline was expected. [ID:nN19350083]
 Later, factory activity in the U.S. Mid-Atlantic region
contracted surprisingly in August to its lowest level in more
than a year, which heightened worries over sustainability of
the economic recovery. [ID:nN19254823]
 While the index of leading economic indicators, a key gauge
of the U.S. economy's prospects, came in as projected in July,
June was revised lower, pointing to a "slow expansion through
the end of the year. [ID:nN19230939] [ID:nWALIJE6HB]
 "We had that poor U.S. employment data," said David Wilson,
director of metals research at Societe Generale. "The market
can disregard some data and pick others. Typical in August, we
will see choppy ups and downs according to whatever data flows
are coming out."
 While copper sold off fairly heavily after the weak
reports, Mitsui's Lennon pointed out that it had pulled up from
the lows by the close on merely modest volume. He also noted
that metals purchases were more robust in other geographic
regions and that other economic data had shown bright spots.
 Investors in recent days have been more positive about
prospects for industrial metals, but traders say buying has
been sporadic and not as strong as earlier this year. Some add,
however, the slower selling pace could be due to seasonal
factors like holidays and plant shutdowns for retooling.
 The current quarter is also seasonally slack for metals
demand as activity slows in construction, particularly in
China. The country is the world's largest consumer of copper,
accounting for more than 30 percent of the market.
 Despite attempts by China's government to slow growth and
rein in price pressures, expectations are for strong growth and
industrial metal demand. ECONCN
 "Chinese economic data are becoming very important for
metals, more so than U.S. data," a metals trader said.
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 CONTANGO
 Three-month aluminium CMAL3 ended at $2,066 a tonne from
$2,107 on Wednesday. Used in transport and packaging, the metal
earlier hit a three week low at $2,058.
 Worries about supplies because of large holdings by two
entities have narrowed the discount for cash material against
the three-month contract to around $2 a tonne, a level last
seen in 2007, from levels near $30 a tonne in June. MAL0-3
 Also unusual is the premium for material for delivery on
Friday against material for delivery on Monday, known as
tom/next and often used as way to lend metal to cover short
positions. CMALT-0 <LME/FB2>
 Tom/next aluminium is trading at a premium or backwardation
around $6 a tonne. On Wednesday the range was flat to $9 a
tonne. These are the highest levels since early 2007.
 This backwardation is expected to attract metal to LME
warehouses, despite a 5,100 tonne fall to 4.464 million tonnes
as of Wednesday. On Monday and Tuesday more than 91,000 tonnes
were delivered to LME warehouses.
 Zinc MZN3 closed at $2,090 a tonne from $2,135 on
Wednesday; lead MBP3 at $2,105 a tonne from $2,122.50; tin
MSN3 at $21,100 from $21,000; and nickel MNI3 at $21,795 a
tonne from $21,900 previously.
 Metal Prices at 1936 GMT Comex copper in cents/lb, LME
prices in $/T and SHFE prices in yuan/T
Metal Prices at 1536 EDT
Metal         Last      Change  Pct Move   End 2009    Ytd Pct
                                                       move
COMEX Cu     332.05       -2.90     -0.87     334.65     -0.78
LME Alum    2065.00      -42.00     -1.99    2230.00     -7.40
LME Cu      7315.00      -75.00     -1.01    7375.00     -0.81
LME Lead    2090.00      -32.50     -1.53    2432.00    -14.06
LME Nickel 21650.00     -250.00     -1.14   18525.00     16.87
LME Tin    21050.00       50.00     +0.24   16950.00     24.19
LME Zinc    2100.00      -35.00     -1.64    2560.00    -17.97
SHFE Alu   15510.00       10.00     +0.06   17160.00     -9.62
SHFE Cu*   58260.00      220.00     +0.38   59900.00     -2.74
SHFE Zin   17580.00      140.00     +0.80   21195.00    -17.06
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
 (Additional reporting by Pratima Desai; Editing by Lisa
Shumaker)


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