Adam Sarhan Reuters Quote: Copper 2.29.12

METALS-Copper slips from 2-wk high after Bernanke speaks

Wed Feb 29, 2012 2:22pm EST

* Bearish Fed comments erode early copper rally
    * Copper prices post 2nd straight monthly gain
    * U.S. 4th quarter economic growth revised up
    * Coming up: Chinese manufacturing PMI Thursday

    By Chris Kelly and Harpreet Bhal
    NEW YORK/LONDON, Feb 29 (Reuters) - Copper fell for
the first time in four days on Wednesday and pulled back from a
two-week high after a tempered view of the U.S. economy from
Federal Reserve Chairman Ben Bernanke led a wave of risk
reduction across broader markets.
    Copper fell alongside other risk asset markets like gold,
crude oil and the euro after Bernanke said the U.S. economy
would have to strengthen to ensure
that the unacceptably high jobless rate keeps dropping.

    "The job market is far from normal," Bernanke said.
"Continued improvement ... is likely to require stronger growth
in final demand and production."
    But he stopped short of signaling further Fed bond
purchases, dashing the hopes of some traders in financial
markets who were betting on more monetary stimulus.

    "The underlying fundamental data has not really shifted, but Bernanke is making it clear that any more additional stimulus from him is off the table at this juncture," said Adam Sarhan, chief executive of Sarhan Capital. "The global demand story for copper now comes more into play. If you have easy monetary policy, that bodes well for the economic recovery and stronger demand by extension. If central banks around the world are going to stop this easy money period, there goes demand." 
    London Metal Exchange (LME) three-month copper shed
$101 to end at $8,499 a tonne, after touching a session peak at
$8,695.25 -- its highest since Feb. 10.
    In New York, the active May COMEX contract settled
with a loss of 4.20 cents at $3.8795 per lb, after dealing
between $3.8050 and $3.9615.
    Copper prices rose earlier in the day on news that the
European Central Bank (ECB) had allocated more than $500 billion
for low-interest loans, fueling hopes that more credit will flow
to businesses and that government borrowing costs will ease
further.
    "The LTRO kicked off the rally back in December, but interestingly enough, today happens to be the second LTRO ... where everything across the board has come back down to life," Sarhan said.
    Further early support stemmed from U.S. data showing the
world's largest economy grew a bit faster than initially thought
on slightly firmer consumer and business spending, calming fears
of a sharp slowdown in growth in early 2012.
     "The U.S. data has clearly been better in recent weeks,
there's underlying strength in the U.S. economy. But Europe
remains a mess and oil prices are a concern," said Nic Brown,
head of commodities research at Natixis.
    "We're optimistic on base metals, and copper in particular,
but we suspect at the minute the price resilience has been
expectation rather than reality."	

    CHINA DEMAND WORRIES
    Copper still posted a second month of gains in February
after hitting a five-month high of $8,765 earlier in the month.
    But analysts say demand from top consumer China, which uses
around 40 percent of the world's copper, needs to bounce back to
justify the metal moving higher.
    Soft physical premiums for copper in Shanghai reflect
continued weakness in Chinese demand, with a Shanghai-based
trader saying premiums for cash copper have slipped to between
$40 and $70 per tonne over London prices from around $80 to $90
earlier this month.
    Copper stocks in warehouses monitored by the LME fell by a
further 2,425 tonnes to 296,425 tonnes, a fresh 2-1/2 year low.
The ratio of cancelled warrants, material earmarked for
delivery, to total stock stood at 31.69 percent, mostly in U.S.
locations.
    In contrast, stockpiles of copper at warehouses monitored by
the Shanghai Futures Exchange remained near 10-year
highs despite a drop last week for the first time since early
December.
    Supporting copper, Chilean industrial production fell 10.5
percent in January from December and 1.2 percent from a year
earlier, hurt by a drop in output in the mining sector.
    In Indonesia, a stoppage at Freeport McMoRan Copper & Gold
Inc.'s Grasberg mine could be resolved within days, with
talks between workers and management progressing well, a union
official said on Wednesday. 	

 Metal Prices at 1843 GMT

  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       387.70       -4.20     -1.07     343.60     12.83
  LME Alum      2327.00        2.00     +0.09    2020.00     15.20
  LME Cu        8499.00     -101.00     -1.17    7600.00     11.83
  LME Lead      2160.00      -95.00     -4.21    2035.00      6.14
  LME Nickel   19250.00     -505.00     -2.56   18710.00      2.89
  LME Tin      23600.00     -455.00     -1.89   19200.00     22.92
  LME Zinc      2112.00      -11.00     -0.52    1845.00     14.47
  SHFE Alu     16250.00      -20.00     -0.12   15845.00      2.56
  SHFE Cu*     61070.00       10.00     +0.02   55360.00     10.31
  SHFE Zin     16140.00       15.00     +0.09   14795.00      9.09
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07

 

URL: http://www.reuters.com/article/2012/02/29/markets-metals-idUSL5E8DS29020120229

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