RTRS: METALS-Copper hits two-week high on ECB injection
* LME copper forward curve still in $20 backwardation
* Copper up 13 pct in year-to-date
* Euro pares gains after fall in U.S. durable goods orders
By Melanie Burton
LONDON, Feb 28 (Reuters) - Copper prices rallied to a
two-week high on Tuesday, as an anticipated cash boost for banks
from the European Central Bank and a retracement in crude oil
prices renewed appetite for risky assets.
The euro traded just below 12-week highs, stocks were firmer
and safe-haven German bonds edged lower as the European Central
Bank's upcoming liquidity injection supported prices and
eclipsed concerns over Greece and the global economic outlook.
The pressure on riskier assets from oil prices also eased as
Brent crude futures extended losses and slipped below
$124 a barrel.
But analysts were becoming increasingly wary about how
sustainable copper prices are, given less than buoyant Chinese
demand.
"...copper's rally is getting increasingly hard to justify
on fundamental grounds. You have LME stocks of copper falling
every day, but stocks in China have risen by more than LME
stocks have fallen over the last four months which suggests that
demand is not that magnificent by Chinese standards," said
Stephen Briggs, analyst at BNP Paribas.
Three month copper on the London Metal Exchange
traded at $8,645 a tonne in official rings,
from Monday's $8,536 a tonne close.
Copper earlier hit its highest since Feb. 10 at $8,689, and
has climbed around 13 percent so far this year.
China is the world's biggest consumer of metals, accounting
for around 40 percent of refined copper demand last year. Demand
from the country has been slow to pick up since its Lunar New
Year holidays in late January.
"With quantitative easing in the air investment interest in
commodities may continue to increase," FastMarkets said in a
note.
On the economic front, new orders for U.S. manufactured
goods fell in January by the most in three years as demand fell
across the board from machinery to aircraft, suggesting the
economy started the year on weaker footing than expected.
COPPER TIGHTNESS
Copper stocks in warehouses monitored by the LME fell below
300,000 tonnes for the first time in 2.5 years, data showed on
Tuesday, while fresh orders, known as cancelled warrants, jumped
by 4,700 tonnes mostly in U.S. locations.
There has been a draw on U.S. stocks this year, because
Western world premiums, or the price paid on top of metal to
take delivery, are relatively cheap due to higher transport
costs than from other global locations.
The drawdown in LME copper stocks was one factor leading to
a tightening in the copper forward spread said a senior trader
in London, which although fuelled by short-covering does show
some improving confidence about the global copper outlook.
"It's a combination of things. We know of some material
being reserved and shipped from the States to China," he said.
"There has also been short-covering. The first wave was
borrowing from Chinese trade, followed by the physical guys, and
then the financial guys -- it's more panic and uncertainty than
solidly based on fundamentals or technicals," he said.
"But overall I have to say people are more confident than at
any time in the last three months in the copper market, and this
is reflected in the spreads," he added.
In other metals, b attery material lead was at
$ 2,265.50 in official rings, from $2,247
and aluminium traded at
$2,348.50 from $2,331.
T in was untraded in
official rings, but bid at $24,1 00
a tonne from $23,705 , while zinc was also
untraded in official rings, but bid at $2,136 from $2,100.
Nickel, also untraded, was bid at
$20,255 from $20,175.
Metal Prices at 1339 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 393.25 4.55 +1.17 444.70 -11.57
LME Alum 2336.25 5.25 +0.23 2470.00 -5.41
LME Cu 8640.25 104.25 +1.22 9600.00 -10.00
LME Lead 2258.25 11.25 +0.50 2550.00 -11.44
LME Nickel 20250.00 75.00 +0.37 24750.00 -18.18
LME Tin 24052.00 347.00 +1.46 26900.00 -10.59
LME Zinc 2127.25 27.25 +1.30 2454.00 -13.31
SHFE Alu 16270.00 15.00 +0.09 16840.00 -3.38
SHFE Cu* 61060.00 660.00 +1.09 71850.00 -15.02
SHFE Zin 16125.00 175.00 +1.10 19475.00 -17.20
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
