January 26, 2012 / 12:07 PM / 8 years ago

METALS-Copper rises after Fed signals stimulus

* LME copper stocks fall to lowest since Sept 2009
    * U.S. jobless benefit claims rise

    By Silvia Antonioli	
    LONDON, Jan 26 (Reuters) - Copper rose more than 2 percent to a
four-month high on Thursday as investors cheered news that the U.S. Federal
Reserve was ready to offer additional stimulus, a move that could lift economic
growth and demand for industrial metals.	
    Federal Reserve Chairman Ben Bernanke said late on Wednesday the U.S.
central bank was ready to offer the economy additional stimulus after it
announced it would likely keep interest rates near zero until at least late
2014. 	
    Benchmark copper on the London Metal Exchange rose more than 2
percent to a session high of $8,610 a tonne, its highest since Sept. 19. It
closed at $8,590 from a last bid of $8,384 on Wednesday.	
    "The Fed's announcement certainly seems to have helped," said Natixis
analyst Nic Brown.	
    "If you think the Fed's action will lead to stronger economic growth, then
yes, it should boost base metals demand, but if you think that the Fed's action
signals more prolonged weakness, then the connection is not that obvious."	
    New orders for U.S. manufactured goods rose in December, and a gauge of
future business investment rebounded, while new claims for jobless benefits rose
only moderately last week, suggesting the labour market in the world's biggest
economy was still healing. 	
    Hopes that Greece will wrap up tortuous negotiations on a debt swap this
week to avoid a chaotic default also supported market sentiment. 	
    The euro hit a five-week high against a broadly weak dollar on Thursday on
speculation of progress in Greek debt negotiations and after the U.S. Federal
Reserve indicated interest rates would stay at ultra low levels for at least
another two years. 	
    A weaker U.S. unit makes dollar-denominated commodities more affordable for
holders of other currencies.	
    	
    THE CHINA FACTOR	
    Copper stockpiles in LME-monitored warehouses have fallen by almost a third
in the past four months, an indication that demand for the metal has improved
recently.	
    Inventories of the red metal fell by 1,875 tonnes to 337,875 tonnes in
LME-bonded sheds, their lowest level since Sep. 2009, the latest data showed.	
    Copper stocks in warehouses monitored by the Shanghai Futures Exchange , however, increased in the past few weeks, which may indicate some
demand weakness in China, the world's largest consumer of the metal.	
    This weakness is temporary, though, according to some analysts.	
    The Shanghai Futures Exchange is closed this week for the Lunar New Year
holiday.	
    "Stocks in Shanghai have gone up recently as imports went up ahead of the
Chinese New Year holiday, but demand from end-users in January has been muted,
so you get a certain accumulation," Brown said.	
    "That was in anticipation of stronger demand later this year, so I don't
think it is hugely worrying. The absolute level of stockpiles around the world
is low."	
    Natixis expects China's apparent demand for copper to grow by 9 to 10
percent this year as a destocking phase comes to an end and apparent demand once
again starts to reflect the needs of real end-users.	
    "China has stepped up its metal imports ahead of the Chinese New Year, and
the question is whether the latest uptick in imports was just due to stockpiling
or whether end-user demand has indeed continued to strengthen," Credit Suisse
said in a note.	
    Chinese imports of refined copper rose 18.3 percent in December on the month
to a record high due to improved arbitrage and increased use of copper for
financing purposes, but inflows fell 3 percent in 2011 from 2010 on low imports
in the first half. 	
    In other metals, tin closed at $24,005 from $22,450, zinc 
closed at $2,205 from $2,175 at Wednesday's close. Lead closed at $2,325
from $2,281 and nickel at $21,600 from $20,940.	
    Aluminium, untraded at the close, was last bid at $2,276 from
$2,252.	
    	
 Metal Prices at 1717 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       389.30        6.70     +1.75     444.70    -12.46
  LME Alum      2271.25       19.25     +0.85    2470.00     -8.05
  LME Cu        8579.50      219.50     +2.63    9600.00    -10.63
  LME Lead      2320.50       38.50     +1.69    2550.00     -9.00
  LME Nickel   21456.00      516.00     +2.46   24750.00    -13.31
  LME Tin      24050.00     1600.00     +7.13   26900.00    -10.59
  LME Zinc      2201.00       26.00     +1.20    2454.00    -10.31
  SHFE Alu     16395.00       30.00     +0.18   16840.00     -2.64
  SHFE Cu*     60720.00      160.00     +0.26   71850.00    -15.49
  SHFE Zin     15855.00      195.00     +1.25   19475.00    -18.59
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below