September 13, 2012 / 10:37 AM / 5 years ago

METALS-Copper holds near four-month peak ahead of Fed decision

* Tin slides after more signs of supply resuming from Indonesia
    * Disappointment over Fed could push copper below $8,000
    * Chinese spot copper 180-250 yuan lower than prompt futures
    * Coming up: U.S. FOMC releases post-meeting statement; 1630 GMT

 (Updates with official prices)
    By Eric Onstad
    LONDON, Sept 13 (Reuters) - Copper hovered on Thursday near four-month highs
hit in the previous session as investors awaited the outcome of a U.S. Federal
Reserve meeting that was expected to unleash fresh monetary stimulus measures.
    Three-month copper on the London Metal Exchange was down 0.2 percent
in official trading at $8,080 per tonne, after dipping to a low of $8,050
earlier in the session.
    On Wednesday copper surged to a four-month peak of $8,170 after a German
court decision gave a green light to ratify the euro zone's new bailout fund.   
    Since last Friday, copper has broken above the key $7,800 ceiling that had
held for months and popped above the $8,000 mark in a burst of optimism over
$157 billion in infrastructure spending planned in top metals consumer China and
fresh measures to tackle the euro zone debt crisis. 
    "At the moment we're pausing here. If you want new investor longs you'll
have to wait to see what the Fed does," said analyst Andrey Kryuchenkov at VTB
Capital in London.
    "It seems the market is convinced that there will be some kind of indication
of further easing. If the market is disappointed, the market will definitely
sink below $8,000 on copper and potentially back towards $7,800."
   A Reuters poll of economists pegged the chances for a third round of Fed
bond buying, known as quantitative easing,at 65 percent, up from 60 percent in
    The combination of higher prices and a rebound in open interest on the LME
in recent sessions shows that investors have been establishing new long
positions, although some of them were taking profits, traders said.
    Open interest in copper MCU-OI-TOT rose by another 4,664 lots to 248,479,
bringing the gain since the start of the month to 13 percent after touching the
lowest levels since Jan. 2007.
    "Some longs prefer to take profit ahead of the (Fed) meeting since they've
already made money on their positions and because there is always a chance that
the Fed won't start another round of quantitative easing - even if many people
expect it," said a Shanghai-based trader with an international firm.    
    Kryuchenkov said that after the Fed meeting the market's focus would return
to China, where spot demand has been lacklustre and where its infrastructure
programme would take time to filter through to metal purchases.
    The most active January copper contract on the Shanghai Futures Exchange
 closed the session 0.3 percent lower at 58,120 yuan ($9,200) per tonne.
    In China's physical copper market, spot cargoes were trading about 180-250
yuan lower than the ShFE prompt September month contract, reflecting
sluggish demand from downstream industries. 
    The ShFE September contract, however, is trading at a premium to forward
months. The backwardation, traders said, was not due to tighter spot demand but
due to Jinchuan Group, China's third-largest smelter, buying up about
20,000-30,000 tonnes of copper over the past few weeks. 
    In other metals, three month tin was the biggest mover, sliding 2.4
percent in official rings to $20,305 a tonne, versus a last bid of $20,795 on
Wednesday, after further signs of supply resuming from Indonesia.
    Indonesia's tin smelters have all restarted operations after a temporary
shutdown halved output from the world's top tin exporter last month, the
Indonesia Tin Association said. 
    In zinc, the premium of three-month metal over cash widened to $31 a tonne
CMZN0-3 on Wednesday evening, compared with $25.75 the previous session and
about $5 in mid-August. This was due to Chinese investors liquidating long
positions against arbitrage plays and funds rolling their positions forward,
Sucden Financial said in a note.
    Three-month zinc was barely changed, up $1.50 at $2,019.50 a tonne
in official trading.
    Aluminium fell $1 to $2,085 a tonne and the Sept-Oct spread
CMALU2-V2 remained tight at a backwardation as much as $19 compared to $20 on
    Lead did not trade in official rings but was bid at $2,126 a tonne,
up $1, and nickel added 0.5 percent to trade at $16,730. 
 Metal Prices at 1207 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
  COMEX Cu       369.25       -1.55     -0.42     344.75      7.11
  LME Alum      2084.50       -1.50     -0.07    2020.00      3.19
  LME Cu        8072.25      -23.75     -0.29    7600.00      6.21
  LME Lead      2127.00        2.00     +0.09    2034.00      4.57
  LME Nickel   16717.00       67.00     +0.40   18650.00    -10.36
  LME Tin      20250.00     -350.00     -1.70   19200.00      5.47
  LME Zinc      2018.25        0.25     +0.01    1845.00      9.39
  SHFE Alu     15660.00      -80.00     -0.51   15845.00     -1.17
  SHFE Cu*     58250.00      -90.00     -0.15   55360.00      5.22
  SHFE Zin     15275.00     -155.00     -1.00   14795.00      3.24
 ** 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 Carrie Ho in Shanghai; Editing by Alison Birrane and
Anthony Barker)
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