RTRS: Copper slides as focus shifts from Obama to weak Europe
* Focus shifts to Europe, U.S. fiscal cliff
* Analysts see dollar firming on safe haven flows
* Lead top gainer on good short term fundamentals
(Recasts, updates with official prices)
By Eric Onstad
LONDON, Nov 7 (Reuters) - Copper slid on Wednesday as investors switched
focus from the outcome of the U.S. election to a weak European economy, a Greek
austerity vote and the U.S. "fiscal cliff" of tax hikes and spending cuts.
Copper initially jumped on news that U.S. President Barack Obama won a
second term, fuelling hopes Washington would continue with economic stimulus
measures, pushing down the greenback.
But the dollar quickly reversed direction, touching a two-month high against
a basket of currencies, and making metals priced in dollars more expensive for
holders of other currencies, as attention quickly switched to problems in
Europe.
The European Commission said the euro zone economy will barely grow next
year, European Central Bank President Draghi said the bank expects the euro zone
economy to remain weak "in the near term" and data showed German industrial
output fell more than forecast in September.
Three-month copper on the London Metal Exchange fell 0.5 percent to
$7,660 a tonne in official trading after earlier rising as much as 1.4 percent
to an intraday high of $7,806.25 after the U.S. election results emerged.
Copper is likely to extend losses in coming days after already falling more
than 8 percent since touching a peak of $8,422 on Sept. 19, said analyst Daniel
Briesemann at Commerzbank in Frankfurt.
"In copper there are risks of some setbacks in the very short term. Have a
look at Greece, there's huge political risk in the euro zone, this should weigh
on the euro and lead to a higher dollar," Briesemann said.
Greece's ruling coalition hopes to overcome its own divisions later on
Wednesday and defy protesters to push through an austerity package needed to
secure aid and avert bankruptcy.
Analysts also said the dollar should get further support from safe-haven
flows prompted by growing worries over the looming U.S. "fiscal cliff" that
risks pushing the economy into deep recession.
Speculators were expected to keep weighing on copper, which could revisit
two-month lows around $7,600 touched on Monday and may even slide as low as
$7,500, Briesemann said.
"But this could provide a floor for further price increases in the medium to
long term," he added.
LEAD SEEN STRONG IN SHORT TERM
On the Shanghai Futures Exchange, the most active February copper contract
rose 1 percent to end the session at 56,600 yuan ($9,100) a tonne.
Investor focus is now turning to a once-in-a-decade leadership transition in
top copper consumer China due to start at a Communist Party congress that starts
on Thursday. Investors are hoping the new government will announce new measures
to spur growth.
"Just as in the case of the U.S. elections, investors will be glad when the
party congress is finally out of the way," said a Shanghai trader.
Chinese downstream copper demand remains weak, with spot copper still
trading at a discount to Shanghai front-month futures prices.
Traders said physical premiums, the price paid on top of LME-based prices
for copper imports into China, have been hovering at around $40-50, around $10
cheaper than a month ago and $80-90 lower than a year ago.
Most other LME metals were stronger than copper, with three-month lead
rising 0.5 percent in official rings to $2,175 per tonne.
Briesemann said the supply-demand fundamentals looked positive for lead in
the short term amid hopes for stronger battery demand in China and low
availability of LME inventories.
LME stocks MPBSTX-TOTAL are down 17 percent since February and 42 percent
are cancelled and not available to the market.
Lead spreads remained tight, with the premium of cash over three months
CMPB0-3rising to $12.50 by Tuesday's close from $10 on Monday and a discount
of $6 on Oct. 23.
Zinc rose 0.3 percent to $1,905 per tonne in official trading after
stocks data MZNSTX-TOTAL showed 88,250 tonnes of fresh cancellations,
increasing total cancelled material not available to consumers to 39 percent of
the total.
Aluminium gained $8 to $1,928 a tonne in official rings and nickel
shed 0.3 percent to $16,025. Tin did not trade in official rings
but was bid at $20,740, up 0.6 percent.
Metal Prices at 1332 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 345.90 -4.70 -1.34 344.75 0.33
LME Alum 1927.25 21.25 +1.11 2020.00 -4.59
LME Cu 7623.00 -77.00 -1.00 7600.00 0.30
LME Lead 2168.75 3.75 +0.17 2034.00 6.62
LME Nickel 16020.00 -55.00 -0.34 18650.00 -14.10
LME Tin 20420.00 -205.00 -0.99 19200.00 6.35
LME Zinc 1894.25 -4.75 -0.25 1845.00 2.67
SHFE Alu 15335.00 35.00 +0.23 15845.00 -3.22
SHFE Cu* 56560.00 510.00 +0.91 55360.00 2.17
SHFE Zin 14925.00 95.00 +0.64 14795.00 0.88
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Carrie Ho in Shanghai; editing by William Hardy)
