RTRS:METALS-Copper flat after rally on U.S. easing hopes
* China's demand for lead, zinc seen slowly picking up
* Copper chart picture suggests upside breakout
* Coming up: German Consumer Sentiment for April; 0600 GMT
(Adds analyst comment, updates prices)
By Melanie Burton
SINGAPORE, March 27 (Reuters) - Copper was largely steady on
Tuesday after rallying more than 2 percent in the previous
session, as worries about slowing demand growth from China
tempered hopes for further monetary easing in the United States.
Copper rose by the most in more than two weeks on Monday as
the dollar weakened after Federal Reserve Chairman Ben Bernanke
said an ultra-loose monetary policy was still needed to reduce
unemployment even though the U.S. economy has shown signs of
improvement.
The Fed chairman's comments helped boost other commodities,
including oil.
But the rally appeared short-lived as investors focused on
slower growth in the economy of China, the world's largest
copper consumer. Three-month copper on the London Metal Exchange
traded largely unchanged at $8,541 a tonne by 0524 GMT.
"Bernanke's comments were supportive for a lot of
commodities. Copper has stayed in a very tight range," said
Jonathan Barratt, chief executive of BarrattBulletin, a
Sydney-based commodity research firm.
"Technically in this consolidation, prices have been very
well-supported on any dip. Based on the charts, I think the
market is looking to break higher," he added.
Copper has been building on an advance since it hit a
two-week trough of $8,262.50 a tonne last week, after BHP
Billiton said it saw flattening Chinese demand
growth for iron ore.
Prices are up more than 12 percent this year but have so far
failed to break above the $8,800 level.
The most-traded June copper contract on the Shanghai Futures
Exchange climbed 0.78 percent to 60,650 yuan ($9,600) a
tonne.
Bearish U.S. housing data was also weighing on copper.
Contracts to purchase previously owned U.S. homes unexpectedly
fell in February, suggesting a further pullback in sales as the
housing market struggles to regain its footing.
Technical analysis, however, shows LME copper is
biased to rise to $9,404 per tonne over the next three months,
as indicated by its wave pattern and a triangle on charts.
Looking ahead, to help it break out of its range, the market
needs fresh fundamental impetus, which may be provided by U.S.
durable goods orders on Wednesday and China's official PMI due
on April 1, Credit Suisse said in a note.
"Both indices could confirm economic stabilisation once more
and provide the needed impetus for industrial metals markets,"
it said.
LEAD BEATS ZINC
In other metals, Chinese demand for zinc and lead from the
galvanised steel and battery sector is slowly but surely picking
up, said Angela Bi of Macquarie in Shanghai.
China is the world's top metals consumer.
"Galvanised steel producers have been restocking since the
end of February so we see some fundamental support for zinc. The
short-term downside risk to zinc is still limited, but I don't
see much momentum to push the price above the marginal cost
level because there is still huge inventory," she added.
Bi said zinc marginal costs are around 15,000 yuan per
tonne. ShFE June zinc futures traded at 15,570 at 0524 GMT, up
0.52 percent.
"For lead, the fundamentals are much better. Smaller lead
acid battery plants have ramped up production since the end of
February. Automakers have also raised production 10-15 percent
in March, at the same time bike production is also recovering
from the Chinese New Year period," she said.
The ShFE June lead contract traded up 0.32 percent
at 15,620 at 0524 GMT.
PRICES
Base metals prices at 0524 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8541.00 8.00 +0.09 12.38
SHFE CU FUT JUN2 60650 470 +0.78 9.56
HG COPPER MAY2 388.40 -0.30 -0.09 13.04
LME Alum 2187.00 1.00 +0.05 8.27
SHFE AL FUT JUN2 16235 00 +0.00 2.46
LME Zinc 2020.00 -1.00 -0.05 9.49
SHFE ZN FUT JUN2 15570 80 +0.52 5.24
LME Nickel 18280.00 150.00 +0.83 -2.30
LME Lead 2003.25 1.25 +0.06 -1.56
SHFE PB FUT 15620.00 50.00 +0.32 2.19
LME Tin 22500.00 0.00 +0.00 17.19
LME/Shanghai arb^ 2397
Shanghai and COMEX contracts show most active months
