RTRS:METALS-Copper steadies after rally, dollar weakness helps
* Base metals seen struggling to breach current levels
* Dollar near 1-month low on dovish Fed comments
* Coming Up: U.S. Consumer Confidence for March; 1400 GMT
By Susan Thomas
LONDON, March 27 (Reuters) - Copper was steady on Tuesday,
as the dollar held near a one-month low and world equities rose
after Federal Reserve Chairman Ben Bernanke signalled the United
States' ultra-loose monetary policy will continue.
But the metal is seen struggling to break out of a recent
trading range, with mixed signals on the outlook for economic
growth in the United States, and China, the world's largest
consumer of copper.
Three-month copper on the London Metal Exchange was
up 0.4 percent at $8,570 per tonne from $8,533 at the close on
Monday. The metal hit $8,765 last month, its highest in around
five months, but has since failed to break through that level.
It 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.
A weaker dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies
"The market was starting to contemplate the absence of
monetary accommodation, and with the comments from Bernanke that
they will remain in place...was very much dovish," Dan Brebner,
an analyst at Deutsche Bank, said.
That would help underpin markets still hamstrung by
uncertainty about global economic growth, especially in China.
China's industrial firms suffered a rare drop in profits in
the first two months of 2012 mainly in petrochemicals, metals
and auto firms, the latest signs of weakness in the world's No.
2 economy and top metal consumer.
"We are in a seasonally strong period for metals but we are
running out of time. We've got six more weeks, then we get to
mid-May then the market is starting to look at the summer
slowdown," Brebner said.
"The China demand situation looks much less robust than the
market would like, but the market is holding up despite all
these factors."
Bearish U.S. housing data has also weighed on copper.
Contracts to buy previously owned U.S. homes unexpectedly fell
in February, suggesting a further pullback in sales as the
housing market struggles to regain its footing.
DEFENSIVE
"Even with the higher close, we do not see much change in
the look of the base metal market as all contracts remain
generally inside the previous week's range," RBC said in a
research note.
"Overall, the market remains on the defensive after being
hit hard on the back of a possible contraction of Europe and
Chinese demand. Until we can get a clear signal that at least
North America and Asia are on the right track together, there is
little to move these prices into a new higher range."
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.
Meanwhile, Chinese demand for zinc and lead from the
galvanized steel and battery sector is slowly but surely picking
up, said Angela Bi of Macquarie in Shanghai.
"Galvanized 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 said.
"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.
Benchmark three-month zinc was up 0.8 percent at
$2,038 from $2,021 at the close on Monday and lead was up 0.4
percent at $2,012 from $2,002.
Tin was up $0.9 percent at $22,700 from $22,500,
aluminium was almost flat at $2,188 from $2,186 and
nickel was up 0.5 percent at $18,220 from $18,130.
Metal Prices at 1005 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 389.85 1.15 +0.30 444.70 -12.33
LME Alum 2184.50 -1.50 -0.07 2470.00 -11.56
LME Cu 8553.75 20.75 +0.24 9600.00 -10.90
LME Lead 2006.00 4.00 +0.20 2550.00 -21.33
LME Nickel 18201.00 71.00 +0.39 24750.00 -26.46
LME Tin 22650.00 150.00 +0.67 26900.00 -15.80
LME Zinc 2031.25 10.25 +0.51 2454.00 -17.23
SHFE Alu 16250.00 15.00 +0.09 16840.00 -3.50
SHFE Cu* 60710.00 530.00 +0.88 71850.00 -15.50
SHFE Zin 15640.00 150.00 +0.97 19475.00 -19.69
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
