METALS-Copper trades sideways ahead of Fed meet

Wed Aug 24, 2011 12:18pm GMT
 

* Glencore offers to buy out Australia's no. 2 nickel Minara Resources
    * LME aluminium orders of 20,650 tonnes in Malaysia's Klang
    * Chile Escondida 1H output down 14 pct on year
    * Coming up: U.S. durable goods for July at 1230 GMT

    By Melanie Burton	
    LONDON, Aug 24 (Reuters) - Copper was little changed within a tight range on
Wednesday as uncertainty over prospects for further monetary easing in the
United States balanced against a positive outlook for Chinese demand and a
softer dollar. 	
    Three month copper on the London Metal Exchange traded at $8,855 a
tonne in official rings, little changed from Tuesday when it closed at $8,850 a
tonne. 	
    The metal used in power and construction has dropped by nearly 9 percent
since the start of the month, and 13 percent since its February 2011 record of
$10,190 a tonne.	
    "It's still a very uncertain outlook for metals in the short term," Arne
Rasmussen of Danske Bank said. 	
    "People are looking forwards to the Jackson Hole conference on Friday ...
There might be more quantitative easing coming up, and that is putting a lot of
pressure on the dollar," he said.	
    A weaker dollar makes commodities more attractive for holders of other
currencies.	
    Hefty gains in equities had been seen on Tuesday based on hopes that Federal
Reserve Chairman Ben Bernanke would announce measures to stimulate the
struggling U.S. economy at its meet at Jackson Hole in Wyoming on Friday.
 	
    "Some of the strength we are seeing in copper and oil is from the effect
that Asia is doing quite well -- we saw the Chinese PMIs pick up slightly early
in the week," he added.	
    There are some signals that Chinese appetite for metals such as copper and
aluminium is improving. Nearby copper and aluminium prices are both trading at a
premium against third-month contracts on the Shanghai Futures Exchange.	
   "We've had some copper demand out the Far East this week and last week as
well. We've done some warrant business out of Korea. I would think that's going
to be shipped to China," said an LME trader.	
    But consumption remains far from robust, and niggling worries that China
won't plug the gap left by struggling Western economies have cast a shadow over
the near term price outlook for many metals.	
    Also souring risk appetite in Europe was a spate of weak economic data on
Wednesday.	
    Euro zone industrial new orders unexpectedly fell in June while  German
business sentiment dropped  more than expected in August. 
 	
     "With expectations of Jackson Hole receding, the very weak IFO could make
this a strong risk off day," analyst David Thurtell of Citi said.	
    At 1230 GMT U.S. durable goods data for July are due. Economists in a
Reuters survey expect a rise of 2.0 percent in July versus a 1.9 percent fall in
June.	
    	
   ESCONDIDA DROPS    	
   Output from the world's largest mine, Chile's Escondida, fell 14 percent in
the first half from a year earlier to 452,408 tonnes, the mine's operator said
on Tuesday, as it grapples with lower ore grades. 	
    Falling supply was largely expected from Escondida, which is majority owned
by global miner BHP Billiton  and extracts 7 percent of the
world's copper, but the drop highlighted ongoing supply-side constraints for
copper. [ID:nN1E77M21Z ]	
    In aluminium , cancelled warrants - or new orders for material --
rose by 20,650 tonnes in the Malaysian port of Klang where the lion's share of
stocks are now unavailable to market. 	
     Klang has roughly half a percent of total LME stocks, which stand at 4.65
million tonnes. <0#MALSTX-LOC-GRD >   	
    "We expect aluminum prices to find good buying support around current
levels," Credit Suisse Private Banking said in a note.	
    "We also think that the downside should be cushioned as our valuation model
suggests that LME prices are trading close to fair value estimate of about
$2,400."	
     Aluminium was untraded in rings but quoted at $2,359/2,360 a tonne,
down from $2,371 on Tuesday's close.	
     Tin was at $23,300 in rings from $23,350 while zinc , used
in galvanizing was at $2,180 from $2,190.	
    Battery material lead was at $2,342 from $2,334 and nickel 
was at $20,825 from $20,660.	
    Global commodities trader Glencore International has offered about A$268
million ($281 million) to acquire the 26.56 percent it does not already own in
Australia's no. 2 nickel Minara Resources. Minara is targeting production of
between 33,000 and 37,000 tonnes of nickel in 2011. 	
 Metal Prices at 1204 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                              move
  COMEX Cu       399.70        0.10     +0.03     334.65     19.44
  LME Alum      2359.00      -12.00     -0.51    2230.00      5.78
  LME Cu        8854.00        4.00     +0.05    7375.00     20.05
  LME Lead      2341.00        7.00     +0.30    2432.00     -3.74
  LME Nickel   20925.00      265.00     +1.28   18525.00     12.96
  LME Tin      23250.00     -100.00     -0.43   16950.00     37.17
  LME Zinc      2178.00      -12.00     -0.55    2560.00    -14.92
  SHFE Alu     17275.00      -15.00     -0.09   17160.00      0.67
  SHFE Cu*     66470.00     -180.00     -0.27   59900.00     10.97
  SHFE Zin     16910.00       -5.00     -0.03   21195.00    -20.22
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07

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