Sarhan Reuters Quote- METALS-Copper ends off on demand worry, recovery threats

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 LOW
 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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