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Mon Jun 20, 2011 2:22pm EDT
* Recovery woes, euro zone debt crisis weighs on sentiment
* Chilean mining ops unaffected by strong earthquake
* Nickel hits lowest since November last year
* Coming up: U.S. existing home sales Tuesday (Recasts, adds New York dateline/byline, updates with New York closing copper price, adds detail and analyst comments)
By Chris Kelly and Sue Thomas
NEW YORK/LONDON, June 20 (Reuters) - Copper ended lower on Monday as investors reduced risk amid concerns over metals demand and global recovery prospects after the release of financial aid to Greece was delayed.
Euro-zone finance ministers gave Greece two weeks from Monday to approve stricter austerity measures in return for another 12 billion euros in emergency loans, piling pressure on Athens to get its ragged finances in order. [ID:nLDE75J1NR]
"From the risk standpoint, investors are asking themselves what solution is going to help resolve or allay some of these concerns we are seeing from the global growth story," said Adam Sarhan, chief executive of Sarhan Capital.
"Greece is not resolved. Eventually you have to address the structural imbalances that are at play. Until those structural imbalances are addressed and resolved, the debt crisis is going to continue in some way, shape, or form."
As a result, the International Monetary Fund (IMGF) warned that the economic recovery would be under threat. [ID:nB5E7GH007]
London Metal Exchange (LME) three-month copper CMCU3 fell $90 to end at $9,005 a tonne, but managed to bounce back from an earlier dip through its 200-day moving average at around $8,897.
In New York, the key September COMEX contract HGU1 settled 2.85 cents lower at $4.0925 per lb.
Despite the negative tone, prices in London and New York stand just 12 percent away from record highs hit in February of this year of $10,190 per tonne and $4.63 per lb.
"Fear is elevated ... there's no question. But when you factor out all of the noise and just focus on the market action, we don't see a lot of pressure ... yet," Sarhan said.
On the supply side, a strong 6.3 magnitude earthquake in Chile's mining heartland had little on the market after both Codelco and Freeport McMoRan (FCX.N) said their key copper mines were unaffected. [ID:nN08136598]
Randy North, a trader at RBC, also cited price pressures related to the fallout in industrial output following the March 11 earthquake and subsequent tsunami in Japan.
"Automotive and electronics factories are just restarting (in Japan) and it is going to take a little bit of time before metals consumption goes back to previous levels."
Japanese factories produce and export key components for the automotive and manufacturing industries.
The March earthquake and tsunami caused supply disruption in Japan that affected industrial production worldwide. [ID:nN27159980][ID:nL3E7HG00W]
In this climate, people are taking money off the table, North said.
"We need to see copper go down to mid-$8,000 levels again to see some more buying."
China's credit tightening measures, aimed at calming inflation, were also clouding the outlook for metals demand. [ID:nL3E7HG1OC]
Nickel CMNI3 hit a session low of $21,337 a tonne, its cheapest since November last year, before ending the day with a loss of $25 at $21,650 a tonne. It is down by about 27 percent from the year's highs reached in February.
"At these levels nickel is looking oversold," Barclays Capital analyst Gayle Berry said.
"From a fundamental perspective we don't see any reason why nickel has underperformed to this extent."
"LME inventories are falling yet prices have been very weak. I think the market is pricing in expectations of a better outlook for supply in the second half of the year."
Nickel inventories in LME-monitored warehouses fell by 516 tonnes to 110,880 tonnes and are down nearly 20 percent since the start of the year to a near two-year trough, data on Monday showed.
The International Nickel Study Group said in April it expected the nickel market to record a 60,000-tonne surplus this year, compared with a deficit of 30,000 tonnes in 2010. [ID:nLDE75F1ZO]
"We believe that demand growth should at least partially absorb additional supplies, particularly once the Japanese steel industry recovers again," Credit Suisse said in a research note. Metal Prices at 1753 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 408.90 -3.20 -0.78 444.70 -8.05 LME Alum 2530.00 -15.00 -0.59 2470.00 2.43 LME Cu 9000.00 -95.00 -1.04 9600.00 -6.25 LME Lead 2450.00 0.00 +0.00 2550.00 -3.92 LME Nickel 21650.00 -25.00 -0.12 24750.00 -12.53 LME Tin 24795.00 -210.00 -0.84 26900.00 -7.83 LME Zinc 2171.50 -15.50 -0.71 2454.00 -11.51 SHFE Alu 16895.00 -30.00 -0.18 16840.00 0.33 SHFE Cu* 67260.00 -740.00 -1.09 71850.00 -6.39 SHFE Zin 17005.00 -225.00 -1.31 19475.00 -12.68 ** 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 Silvia Antonioli in London; editing by William Hardy and Alison Birrane)
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