SINGAPORE, Mar 26: London copper was steady on Tuesday, erasing earlier gains as a flurry of technical buying faded and as traders cut risk on worries that strict terms on a bailout for Cyprus may serve as a template for Europe.
Copper’s rebound from seven-month lows below $7,500 a tonne reached last week has started to sputter on worries over bank runs spreading through Europe, while fundamental demand remains modest from top consumer China.
Three-month copper on the London Metal Exchange turned flat to trade at $7,622.50 a tonne by 0316 GMT, reversing a rise of nearly half a percent early in the session.
The most-traded July copper contract on the Shanghai Futures Exchange fell 0.71 percent to 55,680 yuan ($9,000) a tonne.
‘There’s no massive improvement, but we have seen some moderate improvement compared to the same time last year,’ said Chunlan Li, a Beijing-based analyst with metals consultancy CRU.
‘Seasonal demand on the fundamental-side will continue in the second quarter. Demand for copper tube used in air conditioners is good. We also see cable producers having received a very good amount of orders. Fundamentals don’t support prices falling a long way from here.’
Global equity markets and the euro retreated on Monday after a senior euro zone official said the Cyprus bailout reached earlier could be used to shape other regional banking problems by shifting more risk to depositors and stakeholders.
Traders in Asia said they were selling into earlier price strength, which had been driven by a modest euro rebound from the prior session’s steep fall. They added that this selling was based on expectations of diminishing appetite for riskier assets and ample supply of the metal.
China produced 975,000 tonnes of copper in the first two months of the year, up 11.9 pct on the same period in 2012.
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Barclays Capital said in a client note that premiums offered by LME warehouses in Asia of more than $80 a tonne had attracted copper out of Chinese bonded stocks, meaning that after accounting for FOT (free on truck) charges and shipping, traders stood to make around $15-25 per tonne profit.
‘Premiums currently offered by warehouses in Europe and the U.S. Are, however, not high enough to attract material out of Chinese bonded warehouses due to high shipping costs, though they may serve to re-direct copper originally destined for China,’ it said.
Commodities trading house Glencore is shunting more of the world’s surplus copper into the Malaysian port of Johor, extending a strategy to lock up metal to earn lucrative warehouse rentals and premiums, industry sources say.
(AGENCIES)
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