RTRS: Copper eases in London, up in Shanghai; tin seen surging
* Rio, Credit Suisse positive on copper; ShFE spreads
tighten
* Worries linger about China demand outlook; may be overdone
* Tin up 20 pct YTD, could rally another 10 pct
* Coming Up: ECB rate decision; 1145 GMT
(Updates prices, adds quotes, details and graphics)
By Nick Trevethan
SINGAPORE, April 7 (Reuters) - Copper prices edged lower on
Thursday in London, while Shanghai futures rose 0.3 percent,
with sentiment underpinned after Rio Tinto said it expected a
market deficit of half a million tonnes in 2011 and shortages
through 2013.
Three-month copper on the London Metal Exchange fell
$18.75 to $9,586.25 a tonne by 0501 GMT.
The world copper market could see a supply deficit of half a
million tonnes this year and the shortage may extend beyond
2013, Rio Tinto's copper unit chief executive, Andrew
Harding, said. [ID:nRTV207858]
Harding's deficit view for the year is wider than the market
consensus of around 400,000 tonnes and extends longer than
forecasts by many other players who predict a more balanced
market in 2013.
"Rio have a lot of money to pay some very smart people to do
this kind of analysis. You could argue as a producer they will
be inclined to see markets on the tight side, but I would not
bet against this assessment," said a trader in Singapore.
Most executives, traders and investors meeting at a
CRU/CESCO event in Santiago this week are predicting strong
copper prices with volatility in coming months on fears of a
further growth slowdown in top consumer China.
"The first months of 2011 have seen intense questioning of
the strength of Chinese copper demand. After the release of
strong imports data for January, apparent consumption plunged in
February, with inventories in both SHFE and bonded warehouses
also increasing throughout the month," said Credit Suisse in a
note.
"While the weakness in the physical market is unambiguous,
indicators for underlying demand have remained strong. Fixed
asset investment in particular has shown robust growth, and
industrial production growth has remained solid. Industry level
indicators for major copper end-use sectors have also generally
remained strong."
That appeared to be backed up by timespreads in the Shanghai
copper market, which have shown the price of prompt metal rising
versus futures dates, with prompt currently at a 30 yuan
backwardation versus the third month, narrowing from a near 900
yuan contango in February.
For a chart showing the spread between the first and third
month contracts, click:
here
The most-active copper futures contract on the Shanghai
Futures Exchange SCFcv1 rose 0.3 percent to 71,720 yuan.
"The result has been a large divergence between apparent
consumption data and indicators of underlying demand. We believe
this gap will be closed primarily through a rebound in imports
and refined production. Recent draws of non-bonded SHFE stocks
may be the first sign that this transition is already underway,"
Credit Suisse said.
Investors will pay attention to a European Central Bank
meeting later in the day, which was widely expected to raise
interest rates by 25 basis points from a record low 1 percent to
curb inflationary pressures.
Investors will also scrutinise the language for signs of
further policy ratcheting, which could knock countries on
Europe's periphery including Spain, Portugal, Greece and Ireland
which are already contending with high debt level and austerity
measures.
Tin rose $200 or 0.6 percent to $32,300 or about a
dollar per troy ounce, trading just below its record high of
$32,799, struck in mid-February
Technically, the market looked very bullish, set to rally by
another 10 percent in the next two months.
Tin, up 20 percent so far this year and the strongest of the
base metals, may be in the fifth wave of a five wave cycle,
which based on a Fibonacci projection could target $36,000.
Base metals prices at 0501 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 9586.25 -18.75 -0.20 -0.14
SHFE CU FUT JUN1 71720 240 +0.34 -0.18
LME Alum 2669.25 -0.75 -0.03 8.07
SHFE AL FUT JUN1 16835 05 +0.03 -0.03
HG COPPER MAY1 435.95 -0.75 -0.24 -1.80
LME Zinc 2433.00 -17.00 -0.69 -0.86
SHFE ZN FUT JUN1 18570 -10 -0.05 -4.65
LME Nickel 26660.00 235.00 +0.89 7.72
LME Lead 2804.00 -16.00 -0.57 9.96
SHFE PB FUT SEP1 19115 -105 -0.55 4.17
LME Tin 32300.00 200.00 +0.62 20.07
LME/Shanghai arb 1685
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
