October 4, 2011 / 10:34 AM / 9 years ago

METALS-Copper ends below $7,000/T as macro pressures bite

* Copper ends below $7,000/T for second day in a row
    * Uncertainty about Greek default stokes recession fears
    * Copper canceled warrants hit highest since June 09
    * Coming up: U.S. non-manufacturing data Wednesday

    By Chris Kelly and Harpreet Bhal
    NEW YORK/LONDON, Oct 4 (Reuters) - Copper ended down for a fifth straight
day on Tuesday as macro pressures remained front and center with investors
fearful about the economic implications from Europe's deepening debt crisis.
    The economically sensitive red metal closed below $7,000 per tonne for a
second day in a row and stood near its lowest level in 14 months, as investors
priced in the likelihood of a Greek default and the drumbeat of another global
recession grew louder.
    But the selling slowed and prices clawed back from their worst levels
following a speech by Federal Reserve Chairman Ben Bernanke, which sapped
safe-haven dollar bets by offering the firmest indication yet that the Fed may
take further steps to prevent a weakening U.S. economy from stumbling back into
    "What Bernanke said should be to some extent a positive for risk appetite
in the sense he's talking about using new tools," Danske Bank analyst Christin
Tuxen said.
    London Metal Exchange (LME) benchmark copper shed $190 or 2.7
percent to close at $6,800 a tonne, away from an earlier session low of $6,712.
It hit its lowest level since July 2010 on Monday, at $6,635.
    In New York, the key December COMEX contract fell 4.70 cents or 1.5
percent to settle at $3.1035 per lb.
    "Bernanke gave the currency markets a little rattle and pushed the dollar
lower, and that in turn is allowing the copper market a little bit of relief,"
said Sterling Smith, an analyst for Country Hedging Inc. in St. Paul,
    The euro bounced from a near nine-month low and rallied sharply against the
dollar after Bernanke said the U.S. central bank is prepared to act further to
help the economy.

    Highlighting the increasingly cautious outlook, Goldman Sachs cut its 2012
price forecasts for copper to $9,200 a tonne from $10,790, and cut its Brent
crude estimates to $120 from $130 a barrel, after its economists reduced their
outlook for 2012 global GDP growth.
    Data from the United States backed that cautious outlook. New orders for
U.S. factory goods fell in August for the second time in three months,
suggesting a possible softening in the manufacturing sector.
    But all eyes remained on the euro zone, where European finance ministers
were considering making banks take bigger losses on Greek debt and have
postponed a vital aid payment to Athens until mid-November.
    "The focus continues to be on the situation in Europe. Potential demand
from places such as China is hanging on what happens with Europe and people are
trying to work out how bad the situation can get," said Nic Brown, head of
commodities research at Natixis.
    Copper fell to its lowest level since July 2010 on Monday, after Greece
admitted it would miss its deficit target. The metal lost more than 25 percent
in volatile trade in September on global recession fears.
    "With news flows driving market sentiment, commodities will be in for a
rocky ride this week. Although with China on holidays, lighter volumes could
also mean greater choppiness," ANZ analysts said in a note. Financial markets
in China are shut this week for an extended National Day holiday.
    Reflecting some tentative signs of a pick-up in demand for copper, LME data
showed the ratio of copper canceled warrants to total stocks jumped 12.61
percent, its highest level since June 2009.
    "There is some opportunistic restocking demand coming out of China, and
these numbers tell you it's happening. But it's not as enthusiastic as it might
have been if circumstances were different ," Brown said.
    Looking at longer-term fundamentals for copper, the global market for
refined copper is seen in a 250,000 tonne production deficit in 2012, the
International Copper Study Group (ICSG) said on Tuesday.
 Metal Prices at 1:22 p.m. EDT (1722 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
 COMEX Cu       309.15       -5.90     -1.87     444.70    -30.48
 LME Alum      2173.00      -30.00     -1.36    2470.00    -12.02
 LME Cu        6800.00     -190.00     -2.72    9600.00    -29.17
 LME Lead      1886.00      -75.00     -3.82    2550.00    -26.04
 LME Nickel   18700.00     -325.00     -1.71   24750.00    -24.44
 LME Tin      20990.00      490.00     +2.39   26900.00    -21.97
 LME Zinc      1860.00      -33.00     -1.74    2454.00    -24.21
 SHFE Alu     16640.00      165.00     +1.00   16840.00     -1.19
 SHFE Cu*     54790.00     2190.00     +4.16   71850.00    -23.74
 SHFE Zin     15400.00      715.00     +4.87   19475.00    -20.92
** 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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