RTRS: METALS-LME copper up, technicals support; US debt warning weighs
* Copper up in London, snaps six-session run of falls
* S&P credit outlook on US weighs, China stocks worry
* ShFE lead down 2.8 pct, LME bounces; eye on LME stocks
* Coming Up: US Housing starts; 1230 GMT
(Updates prices, adds quotes, adds details of PMI)
By Nick Trevethan and Carrie Ho
SINGAPORE, April 19 (Reuters) - London copper prices rose on
Tuesday, paring the previous session's losses with support from
a positive near-term technical outlook, but the market remains
under pressure after S&P's warning on the U.S. government's
credit outlook.
Three-month copper on the London Metal Exchange rose
0.4 percent to $9,260 a tonne by 0631 GMT. Copper fell almost 2
percent in the previous session, the market's sixth consecutive
daily decline.
Shanghai's most-active copper futures contract SCFcv1 fell
1.7 percent to 69,850 yuan a tonne.
China's factory expansion stabilised in April, with the HSBC
flash manufacturing purchasing managers' index (PMI) at 51.8 in
April, unchanged from the final reading in March.
The sub-index of input prices fell to 63.1 in April, an
eight-month-low but still indicating persistent price rises --
an area of particular concern for Beijing, which has steadily
tightened monetary conditions for about a year. [ID:nB9E7F101U]
"The PMI number is neutral for the metals market. We are in
the middle of the peak consumption season, and the figure is in
line with expectations," said Yang Jun, an analyst at China
Futures Co.
"The manufacturing sector looks decent right now, but we may
see a visible slowdown in the sector beyond May when the peak
season ends."
Chinese stocks of copper continued to perturb the market,
with Shanghai copper trading at a discount of around 1,000 yuan
to the LME.
Macquarie estimated there were around 550,000 tonnes of
copper in bonded warehouses, all but unchanged from mid-March.
"More than half of the material sitting in the bonded
warehouses belongs to trading houses using copper imports as a
method to get cheaper sources of finance under the terms of a
letter of credit," Macquarie said in a note.
"The rest of the copper is bought directly by domestic
consumers from overseas suppliers."
The bank added that government efforts to crack down on the
practice would be largely unsuccessful.
Ratings agency Standard & Poor's revised its credit outlook
on the United States to negative from stable, citing a "material
risk" that policymakers may not reach agreement on a plan to
trim the country's large budget deficit. [ID:nN18195555]
"The market is reacting to the short term implications. It
was a warning shot for the U.S. lawmakers to stop arguing and to
pull together a plan to deal with their deficit," said Natalie
Robertson, analyst at ANZ.
"The market is very much in risk off mode. Most commodities,
including metals, are weaker, but safe havens like gold and
silver saw inflows."
Technically, after six days of selling, copper was due for a
rebound, Reuters analyst Wang Tao said, noting an upside target
of $9,450.
He noted Monday's sharp fall briefly pierced support at
$9,264, but it quickly recovered, signaling a false break.
Wang added that wave patterns indicated the drop to $9,207
during the previous trading session could have completed a final
wave of a five-wave cycle, and the bullish divergence on the RSI
indicator is likely to be discounted by a rebound.
Other markets also slipped. Shanghai lead SPBcv1 dropped
2.8 percent, but its London equivalent rallied by almost 1
percent after a loss of 4.6 percent on Monday.
Some 40,000-50,000 tonnes of lead are headed for Malaysian
warehouses monitored by the London Metal Exchange as trading
firms cash in on lofty prices for cash material over those for
delivery at a later time.
"We're told there's a large amount heading for Port Klang,"
a trader said on Monday. "It's because of the backwardation; it
makes sense to deliver lead into LME warehouses."
Stocks in Port Klang have over the past week climbed to
51,425 tonnes from 35,175 tonnes on April 11.
Base metals prices at 0631 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9260.00 35.00 +0.38 -3.54
SHFE CU FUT JUN1 69850 -1190 -1.68 -2.78
LME Alum 2667.00 -7.00 -0.26 7.98
SHFE AL FUT JUN1 16650 -110 -0.66 -1.13
HG COPPER MAY1 419.70 -1.40 -0.02 -5.46
LME Zinc 2319.00 -6.00 -0.26 -5.50
SHFE ZN FUT JUN1 17605 -660 -3.61 -9.60
LME Nickel 25420.00 -80.00 -0.31 2.71
LME Lead 2552.50 24.50 +0.97 0.10
SHFE PB FUT SEP1 18065 -515 -2.77 -1.55
LME Tin 32350.00 0.00 +0.00 20.26
LME/Shanghai arb 1028
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
Shanghai lead launched on March 24
