RTRS:METALS-LME copper sinks to 3-week low, Greece delay sours mood
* Volumes up as LME copper prices drop; trade buys on dip
* ShFE forward curve shows pick up in China spot copper mkt
* U.S. Housing Starts/Building Permits for Jan; 1330 GMT
(Adds detail, updates prices)
By Melanie Burton
SHANGHAI, Feb 16 (Reuters) - London copper hit a
three-week low on Thursday, having lost ground for the last four
sessions, after signs of a delay to a bailout for Greece soured
sentiment and put the euro on the defensive against the dollar.
Three-month copper on the London Metal Exchange
slipped 1.3 percent to $8,259.75 a tonne by 0821 GMT, having hit
$8,233 earlier, its lowest since Jan. 23.
The metal has dropped six percent from a five-month high of
$8,765 hit last week, paring the year's gains down to nearly 9
percent from as much as 15 percent earlier this month.
The most-traded May copper contract on the Shanghai Futures
Exchange fell 2 percent to 59,210 yuan ($9,400) a tonne.
Wider market sentiment has been tarnished by a failure to
find a bailout deal for Greece, some disappointing earnings
results and U.S. industrial production figures that were not as
impressive as they might have been, said Matt Fusarelli of
Australia-based consultancy AME Group.
"Markets are very sensitive at the minute and any more weak
numbers over the next couple of days in the very near term could
add to downside pressure on metals," he said.
"There are concerns about Chinese demand, the closed
arbitrage window and lower January imports, but that overstates
the situation because the Lunar New Year fell earlier this year.
We're still quite bullish on copper prices, expecting around
$4.00 a pound ($8,818 a tonne) in the second quarter."
Greece expressed hope it can secure its second EU/IMF
bailout in as many years and a deal on easing its debt burden
next week, but its euro zone peers made clear the months of
increasingly ill-tempered argument are not quite over yet.
Euro zone finance officials are examining ways of delaying
parts or even all of a second bailout programme for Greece while
still ensuring it avoids a disorderly default, several EU
sources said on Wednesday.
Also adding to negative sentiment, Moody's warned on
Thursday it may cut the credit ratings of 17 global and 114
European financial institutions in another sign the impact of
the euro zone government debt crisis is spreading throughout the
global financial system.
In the United States, overall industrial production was flat
in January as unusually mild winter weather weighed on utility
output, but manufacturing output rose and a gauge of factory
activity in New York state hit a 1-1/2-year high in February,
showing a solid underpinning for the economic recovery.
In fundamentals, the arbitrage window or price differential
between London and Shanghai remains firmly shut for Chinese
imports, but there were indications interest was picking up in
the spot market.
"We expect this consolidation to be short-lived given the
improvement in the medium-term backdrop of the sector,"
Credit-Suisse Private Banking said in a note.
The discount for front month ShFE copper against the most
active contract narrowed to almost flat from 690 yuan on
Wednesday as key contracts on ShFE and LME rolled over.
As prices fell, volumes rallied, with LME
three-month copper trading at more than 8,100 lots, about a
third above typical levels seen as London opens.
In other news, output from the world's largest copper mine,
Chile's Escondida, plummeted 24.6 percent in 2011 from a year
earlier to its lowest level in nearly a decade, on sinking ore
grades and a two-week strike, the mine said on Wednesday.
Zinc miners are pushing smelters for a significant drop in
fees they charge to convert concentrate into refined metal in
2012, due to prospects of tighter supply and lower spot premiums
in China, industry sources said ahead of a gathering next week.
PRICES
Base metals prices at 0821 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8259.75 -110.25 -1.32 8.68
SHFE CU FUT MAY2 59210 -1220 -2.02 6.95
HG COPPER MAR2 375.15 -5.00 -1.32 9.18
LME Alum 2168.00 -32.00 -1.45 7.33
SHFE AL FUT MAY2 16125 -95 -0.59 1.77
LME Zinc 1988.00 -24.00 -1.19 7.75
SHFE ZN FUT MAY2 15605 -340 -2.13 5.47
LME Nickel 19950.00 -125.00 -0.62 6.63
LME Lead 2024.00 -38.00 -1.84 -0.54
SHFE PB FUT 15595.00 -295.00 -1.86 2.03
LME Tin 24400.00 -195.00 -0.79 27.08
LME/Shanghai arb^ 1691
Shanghai and COMEX contracts show most active months
