November 14, 2012
Copper fell slightly on Tuesday as a dispute between international lenders threatened to further delay an aid payment to debt-burdened Greece, weighing on risk appetite and keeping the euro close to a two-month low against the dollar. Benchmark copper on the London Metal Exchange traded at $7,612 in official rings, down 0.3 percent from a close of $7,638 on Monday.
“We keep getting positive data from the US and China but the market is worried about Greece,” said T-Commodity consultant Gianclaudio Torlizzi. “Once again the EU is showing how immature it is at handling the debt crisis: after the Madrid worries now Greece has come back to scare markets.”
Metals prices, however, are likely to see some support from recent data showing the economy of China, the world’s biggest metals consumer, was recovering and likely to meet its growth target for the year. China consumed about 40 percent of global production of copper last year.
It produced some 520 thousand tonnes of refined copper in October, an 8.6 percent year-on-year increase, data from China’s National Bureau of Statistics showed. China’s aluminium output also rose significantly, up by 20.3 percent year-on-year to 1.72 million tonnes in October.
“On the back of higher treatment and refining charges, copper smelters stepped up their capacity utilisation rates in October to their highest level this year…This also explains, at least in part, why copper imports were so weak,” Commerzbank said in a research note.
“Chinese aluminium smelters have clearly felt encouraged by the plans of the State Reserve Bureau to purchase 160 thousand tonnes of aluminium from the country’s major producers, and have already increased production in anticipation.” In copper physical markets, Chinese traders reported better domestic sales as recent low prices drew in bargain-hunters.
“There has been a steady rise in domestic copper business lately. Imported copper sales have also stayed stable due to a recent improved arbitrage,” said a Shanghai-based trader. LME copper was trading lower than the most active Shanghai Futures Exchange copper price, giving consumers an opportunity to import.
For the longer-term outlook, state-backed research firm Antaike said in a client note that China’s output of refined copper will continue to grow, albeit at a lower pace than its production of ores and concentrates. “Chinese reliance on imported copper concentrates will increase by 10 percent annually in the future… net import of refined copper will be stable at around 2.1 million tonnes annually,” it said. It also predicted that China’s demand for copper will also continue to grow, but said the era of double digit growth was over. Aluminium traded at $1,962 in rings from $1,968 Monday’s close while zinc, used to galvanise steel, exchanged hands at $1,920 from $1,931. Battery material lead was untraded in rings but was last bid at $2,148 from $2,160 while tin traded at $20,400 from a last bid of $20,350 a tonne on Monday. Nickel, untraded in rings, was bid at $15,995 from $16,055.