RTRS:METALS-Copper climbs for 2nd day, but eyes worst month since May
* Antofagasta Q3 copper output up nearly 9 percent
* Asia traders see selling into copper rallies
* Metals market eyes China official PMI on Thursday
* Coming Up: Germany retail sales for Sep ; 0700
GMT
(Adds detail, updates prices)
By Melanie Burton
SINGAPORE, Oct 31 (Reuters) - London copper climbed for a
second session on Wednesday, pushing further away from two-month
lows as risk appetite picked up, but the industrial metal is
heading for its weakest month since May as demand growth from
top consumer China slows.
The metal's near-term outlook has also been clouded by event
risks that have deterred consumers from large-scale orders, such
as the U.S. presidential election on Nov. 6 and China's
leadership transition during a meeting that starts on Nov. 8.
Uncertainty has also been heightened by the super storm Sandy's
impact on the U.S. East Coast.
"China's rebalancing strategy isn't clear, that's holding
investors back a bit and what is happening in the euro zone
hasn't gone away," said Thomas Lam, chief economist at DMG &
Partners Securities in Singapore.
"One of the key worries related to the U.S. elections is the
link to all of the tax provisions that are set to expire at the
end of the year ... We could see a fiscal drag of between 3.5 to
4 percent of U.S. GDP - that's huge," he added.
Three-month copper on the London Metal Exchange
climbed 0.94 percent to $7,792.25 a tonne by 0716 GMT, building
on small gains from the previous session after prices plumbed
two-month lows of $7,670 this week.
LME copper is down more than 5 percent in October, its
steepest drop since falling nearly 12 percent in May.
The most-traded February copper contract on the Shanghai
Futures Exchange rose 0.67 percent to close at 56,860
yuan ($9,100) a tonne.
European stock index futures signalled a mixed open on
Wednesday as disappointing earnings from ArcelorMittal ISPA.AS
and Anheuser-Busch InBev ABI.BR rekindled worries over the
outlook for corporate profits.
Asian shares rose and the yen was pressured on Wednesday, as
risk appetite recovered slightly after European equities and the
euro firmed overnight while U.S. financial markets looked set to
resume trading after the passage of the powerful storm.
ArcelorMittal ISPA.AS, the world's largest steelmaker, said
it would slash its annual dividend as it focused on cutting debt
after slipping into a net loss in the third
quarter.
Its South African unit posted a third-quarter
headline loss on Wednesday and expects an even worse fourth
quarter due to lower domestic demand and production losses.
In the United States, millions of people were left reeling
in the aftermath of Hurricane Sandy.
In Europe, euro zone finance ministers will hold a
conference call on Wednesday to discuss progress in negotiations
of the revised Greek bailout but are not expected to make any
decisions yet, two euro zone officials said on
Tuesday.
"Market sentiment seem(s) to have stabilized tentatively
with oil and industrial metals prices consolidating," Credit
Suisse said in a note.
"The next few days will be important as leading economic
indicators are due in China, the United States and Europe.
Further signs of stabilizing economic activity could help
commodity prices to regain some lost ground."
China's official manufacturing gauge is due for release on
Thursday, while a monthly US jobs report for October is
scheduled for release on Friday.
LIGHT APPETITE
Traders in Asia said copper was stuck in a range, day
trading on technical levels between the 90- (7804) and 100-
(7768) day moving averages, with rallies likely to be lightly
sold in Asia.
"There is not much conviction in China with the discount
from paper to physical (prices) remaining large. Still, Chinese
are reluctant to sell aggressively for now," said one trader
based in Shanghai.
China's appetite for copper imports may fall next year as
domestic production of refined copper rises, an analyst at
state-backed research firm Antaike said this week.
China accounted for about 40 percent of refined copper
demand last year, or about 8 million tonnes, and imports about 3
million tonnes of copper a year.
Consumption of refined copper in China will rise 5.5 percent
to about 8.1 million tonnes next year as the economy picks up in
the world's top consumer of the metal, the analyst said.
Meanwhile, supply outside China is also set to rise.
Chilean miner Antofagasta < ANTO.L> said third-quarter copper
output rose almost 9 percent year-on-year, boosted by improved
production at its trouble-hit flagship mine Esperanza and
steadier volumes elsewhere.
PRICES
Base metals prices at 0716 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7792.25 72.25 +0.94 2.53
SHFE CU FUT FEB3 56860 380 +0.67 2.71
HG COPPER DEC2 353.55 2.95 +0.84 2.90
LME Alum 1922.75 13.75 +0.72 -4.81
SHFE AL FUT JAN3 15340 55 +0.36 -3.19
LME Zinc 1868.00 13.00 +0.70 1.25
SHFE ZN FUT JAN3 14815 135 +0.92 0.14
LME Nickel 16199.00 149.00 +0.93 -13.42
LME Lead 2063.75 21.75 +1.07 1.41
SHFE PB FUT 15290.00 110.00 +0.72 0.03
LME Tin 20060.00 260.00 +1.31 4.48
LME/Shanghai arb^ 53
Shanghai and COMEX contracts show most active months
