WSJ: BASE METALS: Copper Sags On Greek Debt Deal Delays, Dollar
--Comex March copper down 1.1% at $3.7560/lb
--Greek debt deal stalemate stokes worries about EU debt crisis
--Goldman Sachs says short-term retreat in copper prices likely to be "shallow"
By Tatyana Shumsky
Of DOW JONES NEWSWIRES
NEW YORK (Dow Jones)--Copper prices fell Tuesday as concerns about stalled debt restructuring talks in Greece and a stronger dollar weighed on investor appetite for growth-sensitive assets.
The most actively traded contract, for March delivery, was recently down 4.25 cents, or 1.1%, at $3.7560 a pound on the Comex division of the New York Mercantile Exchange.
The European sovereign debt crisis recaptured trader attention amid signs of a widening rift between Greece and its private-sector creditors. The euro-zone member must reach a deal on writing down its debt in order to qualify for the next installment of bailout aid and avoid a default that could destabilize the currency bloc.
Copper prices retreated on the Greek news as the metal is widely used in manufacturing and construction, two economic sectors which have struggled to bounce back from the global financial crisis.
A stronger dollar also pressured copper futures lower. Copper is priced in dollars and tends to lose its appeal to investors who hold other currencies when the dollar strengthens as the metal appears more expensive to these market participants.
Goldman Sachs Group Inc. (GS) said any dips in copper in particular should find interested buyers.
"While the [recent] rally appears 'too much, too soon,' we expect that a near-term pullback in the copper price is likely to be short lived and shallow," helped by stronger physical copper purchases, an end to destocking by manufacturers in Europe and a shift to looser monetary policy in China, the bank said in a report.
Meanwhile, data from the International Copper Study Group showed the global market for refined copper was in deficit by 82,000 metric tons in October. For the first 10 months of 2011 the market faced a production shortfall of 296,000 metric tons, compared with a production shortfall of 439,000 metric tons in the same period of 2010.
The data "suggests that yet another deficit will likely materialize this year as well given that supply remains relatively unresponsive against high prices and a steady demand backdrop," INTL FCStone senior commodity analyst Edward Meir said in a note to clients.
-By Tatyana Shumsky, Dow Jones Newswires; 212-416-3095; tatyana.shumsky@dowjones.com
