Mon Jul 8, 2013 12:32pm EDT
* Dollar retreats from 3-yr high vs a basket of currencies * China trade data will give clues on appetite for metals By Silvia Antonioli LONDON, July 8 (Reuters) - Copper rose on Monday, recovering from a sharp drop on Friday as the dollar retreated from three-year highs, but worries over demand prospects in top consumer China kept gains in check. Benchmark copper on the London Metal Exchange (LME) ended at $6,830 a tonne, up from Friday's close of $6,789. It fell more than 2 percent in the previous session after data pointing to stronger-than-expected growth in the U.S. job market bolstered concerns that the Federal Reserve could start winding down its stimulus programme as early as September. The metal, used in the power and construction industries, has lost about 15 percent so far this year. The U.S. dollar dipped against a basket of currencies as investors took profit after earlier pushing the greenback to a three-year high following last week's strong U.S. jobs data. But analysts said the retracement was temporary and that the currency would resume its uptrend. A stronger dollar makes dollar-priced commodities such as metals costlier for non-U.S. investors. China's resolve to revamp its economy for the long-term will be tested this month when a slew of data is expected to show growth is grinding towards a 23-year low, with no recovery in sight. Chinese trade numbers are due on July 10 and gross domestic product on July 15. "I suspect (copper) will continue to stay under pressure because of concerns over growth," Societe Generale analyst Robin Bhar said. He added, however: "There is no reason to see fresh lows as much, if not all, of the negative news should now be incorporated into the price. The focus will be on Chinese data." POSITIVE FACTORS On the bullish side, data on Friday suggested an improvement in physical demand. Stocks of copper , aluminium and lead in warehouses registered with the Shanghai Futures Exchange (SHFE) fell to multi-month lows, while stocks of zinc fell to their lowest level since late 2010. "We regard the current pessimism exhibited by market participants as exaggerated. In our opinion, metal prices should stabilise, with Wednesday's trade figures from China doubtless playing their part," Commerzbank said in a research note. "After all, metal stocks in China have declined significantly of late, Chinese traders are likely to have utilised the low LME prices and the arbitrage between the LME and the SHFE in recent months to step up their metals purchases." Metal Prices at 1617 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2012 Ytd Pct move COMEX Cu 3.10 0.03 +1.07 365.25 -99.15 LME Alum 1803.00 -9.00 -0.50 2073.00 -13.02 LME Cu 6830.00 50.00 +0.74 7931.00 -13.88 LME Lead 2073.25 43.25 +2.13 2330.00 -11.02 LME Nickel 13440.00 140.00 +1.05 17060.00 -21.22 LME Tin 19376.00 526.00 +2.79 23400.00 -17.20 LME Zinc 1875.50 135.50 +7.79 2080.00 -9.83 SHFE Alu 14225.00 -80.00 -0.56 15435.00 -7.84 SHFE Cu* 49030.00 -850.00 -1.70 57690.00 -15.01 SHFE Zin 14415.00 -70.00 -0.48 15625.00 -7.74 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
Article Courtesy of http://www.reuters.com
Intonu is a leading trader in ferrous and nonferrous metals in Atlanta and the Southeast region.