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METALS-Copper slides on renewed European debt worries
September 26, 2012 / 11:17 AM / 5 years ago

METALS-Copper slides on renewed European debt worries

* Spanish, Greek concerns weigh on euro
    * Spot copper demand low ahead of Chinese holiday

 (Adds comments; updates with closing prices)
    By Eric Onstad and Silvia Antonioli
    LONDON, Sept 26 (Reuters) - Copper fell on Wednesday as investors ditched
metals along with other risk assets after protests in Spain and Greece renewed
fears about the euro zone debt crisis and its drag on global economic growth.
    Three-month copper on the London Metal Exchange fell 1.9 percent to
close at $8,120 per tonne, after rising 1.1 percent in the previous session. 
    The metal used in construction and the power sector had gained about 16
percent from early August until hitting a 4-1/2 month peak last week on the back
of central bank stimulus measures.
    Copper has eased 4 percent from last week's high of $8,422 a tonne.
    "After the central banks' action prices ran ahead of the fundamentals but
there is a general recognition now that the rally was overdone and problems
haven't really gone away yet," said Standard Chartered analyst Daniel Smith.
    "There are some key concerns at this point: there are ongoing worries about
the euro zone and about a softer tone in China. China has been revising down its
macro forecast for next year and a lot of the fundamentals data for base metals
also point to softness: physical premiums are down and apparent consumption of
copper has fallen in August."
    Investors' focus switched back to the euro zone as protesters in Spain
clashed with police, demonstrating against a new round of austerity measures.
    In Greece, police fired tear gas at hooded youths hurling petrol bombs and
stones as tens of thousands took to the streets in Greece's biggest
anti-austerity demonstration in months. 
    "There's higher risk aversion now that the euro zone debt crisis is back in
focus again. Just take a look at the pictures from Spain at the violent
protests, this is putting pressure on cyclical commodities," said Daniel
Briesemann, analyst at Commerzbank in Frankfurt.
    The euro fell and the dollar rose to a two-week high against a basket of
currencies, making it more expensive to buy dollar-priced metals with
other currencies.      

    Although three-month tin fell 3 percent to close at $20,800 a tonne
in official rings, tightness in nearby material kept spreads at their highest
levels in over two years.
    The premium of cash metal over the three month contract CMSN0-3 was at $99
a tonne on Wednesday, down from $120 per tonne on Tuesday, the highest since
August 2010, but still strong compared to $27 a week ago.
    The backwardation, however, was expected to draw metal into LME warehouses
and may ease the situation, Triland Metals said. 
    "The spread remains tight but there is tin beginning to be offered around as
the back will attract material to the market," Triland said in a note on Tuesday
    Last week, nearby tin spreads surged as shorts scrambled to cover positions,
facing off against a party holding a large position. 
    Latest LME data show one party holds 40-50 percent of combined stock
warrants and cash contracts and another one has a 30-40 percent position.
    Aluminium did not trade at the close, but was bid at $2,072 per
tonne, down 1.3 percent from Tuesday's close.
    Barclays, which released its global markets outlook on Tuesday, was wary of
more gains in base metals and advised clients to sell aluminium, mainly used in
transport and packaging.
    "Aluminium appears to be the one with the greatest potential surplus at this
point, so we'd be looking to selectively short aluminium, perhaps the early 2013
contracts," Paul Horsnell, head of commodities research, told a presentation. 
    Galvanizing metal zinc shed 3 percent to close at $2,071 per tonne,
nickel, was untraded at the close but was last bid at $18,055, 2 percent
below its Tuesday close and lead lost 2.6 percent to close at $2,264.
 Metal Prices at 1631 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       370.90       -5.50     -1.46     344.75      7.59
  LME Alum      2079.00      -26.00     -1.24    2020.00      2.92
  LME Cu        8129.00     -146.00     -1.76    7600.00      6.96
  LME Lead      2265.25      -59.75     -2.57    2034.00     11.37
  LME Nickel   18055.00     -345.00     -1.88   18650.00     -3.19
  LME Tin      20675.00     -775.00     -3.61   19200.00      7.68
  LME Zinc      2079.00      -57.00     -2.67    1845.00     12.68
  SHFE Alu     15685.00       45.00     +0.29   15845.00     -1.01
  SHFE Cu*     59120.00      -20.00     -0.03   55360.00      6.79
  SHFE Zin     15550.00       45.00     +0.29   14795.00      5.10
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07

($1 = 6.3066 Chinese yuan)

 (Additional reporting by Carrie Ho, editing by William Hardy)

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