Reuters Quote: Copper caps worst monthly loss since June 2010

Wed Aug 31, 2011 2:41pm EDT

  * London copper breaks above 200-day moving average

 * COMEX copper still eyes death cross technical barrier
 * Labour talks continue at Vale's Canadian nickel ops
 * Coming up: China/U.S. manufacturing data Thurs.
 (Rewrites, adds New York dateline/byline, updates with New York closing copper price, adds
graphic and analyst comments)
 By Chris Kelly and Melanie Burton
 NEW YORK/LONDON, Aug 31 (Reuters) - Copper capped its worst monthly performance in more than a
year with a firmer close on Wednesday, as concerns about tightening supply and upbeat U.S. data
steered the rally.
 Losses in the base metals complex piled up in August, with aluminum CMAL3 posting its weakest
performance since May 2010, zinc's CMZN3 weakest since November 2010, and tin's CMSN3 greatest
monthly loss since October 2008.
 But the selling pressures came to a halt on the last day of the month Wednesday, with technical
momentum and supply-side restraints fueling gains in copper.
 "It is very much a case of refocusing on fundamentals. We had an awful Chilean production
report which highlights the challenges the industry faces in trying to grow supply this year," said
Gayle Berry, analyst at Barcap. [ID:nN1E77T0BQ]
 London Metal Exchange (LME) copper for three-month delivery CMCU3 broke above its 200-day
moving average at $9,286 a tonne at one point, before ending at $9,275, up $115 on the day.
 In New York, the key December COMEX contract HGZ1 jumped 6.30 cents or 1.5 percent to settle
at $4.2045 per lb.
 It too received a technical boost with an earlier breach of its 100-day moving average at
$4.2092.
 But analysts said the move lacked conviction and a greater technical barrier stood in its way.
 "I still think there is still some work to be done," said Adam Sarhan, chief executive of Sarhan Capital in New York.
 "We are seeing a light-volume bounce up to a logical area of resistance ... there is also the issue of a death cross, which bodes poorly for the near-term outlook."
 A death cross occurs when the 50-day moving average sinks below, or crosses over, its 200-day moving average.
 (Graphic: link.reuters.com/puk53s )
 "As long as copper stays below its 50- and 200-day moving averages, the bears remain in control."
 Total copper trading volumes in New York reached about 29,000 lots -- more than 40 percent
below the 30-day average, according to preliminary data from Thomson Reuters.
 Copper received a boost from a report that the U.S. private sector added 91,000 jobs in August
while an index of factory activity in the U.S. Midwest in August and U.S. July factory orders were
better than expected. [ID:nN9E7H701V]
 "There are still a number of question marks when it comes to the macro outlook and there still
could be a lot of fear-driven weakness in prices ahead," Berry said.
 "The next month is going to be interesting because that is when seasonally you would expect
buyers to start returning to the market again so we should get a feel for how much of an impact the
slower economic data is having on actual metal fundamentals."
 Premiums for bonded copper in Shanghai have fallen more than 10 percent from last week due to
poor arbitrage and reduced demand for spot metal in the domestic market, marking the first fall in
premium since July, traders said on Wednesday.[ID:nL4E7JV1M0]
 NICKEL TALKS
 In nickel, labour talks appear to be going smoothly at Vale's (VALE5.SA) Thompson mining,
smelting and refining complex in Manitoba, Canada where the current contract expires in
mid-September.
 "Talks continue in Thompson and we remain committed to reaching a deal," a Vale spokesman told
Reuters.
 Thompson has the capacity to produce around 60,000 tonnes a year of refined nickel, according
to Reuters Metal Production Database.
 Nickel CMNI3 ended up $25 at $22,200 a tonne.
 Metals database here
 Global metal stocks link.reuters.com/deg67n
 LME stocks vs prices r.reuters.com/hub62s
 Metal Prices at 1826 GMT
 COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
 Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                         move
 COMEX Cu       420.20        6.05     +1.46     444.70     -5.51
 LME Alum      2469.00       44.00     +1.81    2470.00     -0.04
 LME Cu        9274.00      114.00     +1.24    9600.00     -3.40
 LME Lead      2578.00       20.00     +0.78    2550.00      1.10
 LME Nickel   22200.00      250.00     +1.14   24750.00    -10.30
 LME Tin      24400.00      400.00     +1.67   26900.00     -9.29
 LME Zinc      2291.50        6.50     +0.28    2454.00     -6.62
 SHFE Alu     17470.00       25.00     +0.14   16840.00      3.74
 SHFE Cu*     68360.00      110.00     +0.16   71850.00     -4.86
 SHFE Zin     17360.00       45.00     +0.26   19475.00    -10.86
** 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 Harpreet Bhal in London and Euan Rocha in Toronto; Editing by Alison
Birrane;editing by Sofina Mirza-Reid)
URL: http://www.reuters.com/article/2011/08/31/markets-metals-idUSL5E7JV0P420110831
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