September 18, 2015 / 7:21 AM / 5 years ago

METALS-London copper slips as Fed rate delay sparks jitters

* Copper open interest falls to lowest in 18 months
    * Coming up: CFTC releases Comex positioning data

 (Adds detail, updates prices)
    By Melanie Burton
    MELBOURNE, Sept 18 (Reuters) - London copper slipped on
Friday after the Federal Reserve delayed hiking rates due to a
weaker global economy, with prices set for a flat weekly close
as mines restarted following a quake in Chile, soothing concerns
over supply.
     The Fed kept interest rates unchanged on Thursday in a bow
to worries about the global economy, financial market volatility
and sluggish inflation at home, but left open the possibility of
a modest policy tightening later this year. 
    The move had a dual effect on commodity markets, with the
dollar drop making the asset class more affordable to buyers
holding other currencies, but also renewing doubts over the
outlook for industrial growth and metals demand.  
    "I think a bit of a sell off from here - it's the first time
the Fed invoked overseas developments in their decision and the
situation overseas is likely going to get much worse before it
gets better - so it should be an overall negative," said analyst
Ed Meir of INTL FC Stone in New York. 
    Three-month copper on the London Metal Exchange had
erased early gains to slip 0.8 percent to $5,347 a tonne by 0117
GMT, after closing a tad firmer in the previous session when it
struck its highest in eight weeks at $5,440.50.
    Asia-based traders who had hoped for volatility after the
Fed decision were disappointed. "What a fizzer," said one. 
    Prices on Thursday caught a lift as supply issues pushed
back into focus following an earthquake in Chile, before easing
as disruptions failed to mount.
    Codelco and Antofagasta PLC said they
were resuming operations at two big copper mines in Chile on
Thursday after a magnitude 8.3 earthquake hit off the coast of
the world's top copper producer. 
    A measure of live copper contracts on the LME showed that
interest has fallen to its smallest in 18 months. MCU-OI-TOT
    Shanghai Futures Exchange copper fell by 0.9
percent to 40,710 yuan ($6,400) a tonne.
    Hopes for a revival in metals demand are pinned on stimulus
from China feeding into the real economy and in property in
particular which is a key consumer of metals like copper.
    Home prices in China rose for a fourth consecutive month in
August, offering hope that the ailing property sector is
becoming less of a drag on the slowing economy. 
    Chinese alumina prices are likely to clock up further falls
in the coming quarter after shedding about 6 percent over the
past three months, as growth in production outstrips demand,
industry sources said. 
    Three month LME copper          
    Most active ShFE copper         
    Three month LME aluminium       
    Most active ShFE aluminium      
    Three month LME zinc            
    Most active ShFE zinc           
    Three month LME lead            
    Most active ShFE lead           
    Three month LME nickel          
    Most active ShFE nickel          
    Three month LME tin             
    Most active ShFE tin                    
($1 = 6.3612 Chinese yuan)

 (Reporting by Melanie Burton; Editing by Joseph Radford and
Subhranshu Sahu)
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