SINGAPORE, Nov 4: London copper edged down today as a rally driven by improving global factory activity petered out, and as a firm dollar kept a lid on prices.
Manufacturing expanded around the world in October, with business surveys showing U.S. Factory output growing at its fastest pace in 2-1/2 years and Asian manufacturers reporting the fastest upturn in months, led by China.
Improved prospects for copper demand fed into gains early in Asian hours, but the rise wasn’t sustained. Copper prices have been hemmed in a range since early August.
“There’s a lot of forces at play pushing down on copper prices – such as prospects for rising supply,” said analyst Tim Radford of Sydney-based advisor Rivkin.
Radford said, however, that dwindling volatility suggests a break out of the range may be on the cards, with traders watching closely for signals on when the Federal Reserve may start to draw back its bond purchases.
“It will come down to non farm payrolls on Friday night. If we see a strong showing of growth I think we’ll see a positive response from metals markets, because of the improving economic outlook for demand,” he added.
Three-month copper on the London Metal Exchange slipped by 0.4 percent to $7,213.75 a tonne by 0313 GMT,
Copper ended up almost 1 percent last week, its biggest weekly gain since September. Prices have been within a $7,000-$7,420 a tonne range since early August.
The January copper contract on the Shanghai Futures Exchange fell 0.6 percent to 51,720 yuan ($8,500) a tonne.
Reflecting some improvement in investor sentiment for copper, hedge funds and money managers broadly raised bullish bets in futures and options of copper for the week ended Oct. 22 to the highest since February, a report by the Commodity Futures Trading Commission showed on Friday.
But in top consumer China, bonded stocks are climbing, while premiums have begun to soften. Citi estimates that bonded copper stocks have climbed to around 450,000 tonnes from lows of 300,000 tonnes a month or two ago, while stocks have also built in domestic non-exchange warehouses.
Reflecting softer demand, premiums for Shanghai bonded copper stocks have slipped by $2.50 to $180-$205 according to China price provider Shmet. (http://www.Shmet.Com/)
Across other metals, signs of tightening supply in the tin market, which has been hampered by a drop off in shipments from top exporter Indonesia since August, may not be sustained, analysts said, with volumes slowly improving.
Cash prices for LME tin jumped higher than three month prices, trading at a $10 premium on Friday from a $19 discount at the end of October.
“How protracted the tightness is remains to be seen, with the tightness perhaps a function of reduced liquidity rather than specific positioning,” said Standard Bank in a note.
Base metals prices at 0314 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7213.75 -26.25 -0.36 -9.02
SHFE CU FUT JAN4 51720 -290 -0.56 -10.33
HG COPPER DEC3 3.28 -0.01 -0.44 -99.10
LME Alum 1847.75 4.75 +0.26 -10.78
SHFE AL FUT JAN4 14375 -20 -0.14 -6.32
LME Zinc 1933.75 -6.25 -0.32 -6.29
SHFE ZN FUT JAN4 14990 -555 -3.57 -3.57
LME Nickel 14475.00 -95.00 -0.65 -15.62
LME Lead 2182.00 -5.00 -0.23 -6.75
SHFE PB FUT 14360.00 -35.00 -0.24 -5.84
LME Tin 22775.00 0.00 +0.00 -2.67
LME/Shanghai arb^ -244
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third
Month
PRICES
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
Three month LME tin
($1 = 6.0995 Chinese yuan)
($1 = 6.0995 Chinese yuan)
(agencies)
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