BR:London copper eases from near 2-month top on tapering prospects
SINGAPORE: London copper edged back on Tuesday as traders reduced exposure to risk ahead of a US Federal Reserve meeting later this week, to bring prices back from nearly two months hit a day earlier. A pick up in global factory activity and a near-term shortage of refined metal has helped copper recover 5 percent from a three-month low of $6,910 a tonne struck last month.
"The fundamentals behind copper itself seem to be looking good - good economic data, demand and premiums are higher," said Jonathan Barratt, chief executive of commodity research firm Barratt's Bulletin in Sydney.
"Technically it's near the start of a rally - it if breaks $7,320, then up she goes," he added.
Three-month copper on the London Metal Exchange slipped by 0.29 percent to $7,268.75 a tonne by 0310 GMT, paring gains of half a percent from the previous session.
LME copper prices rose to $7,307.70 a tonne on Monday, the highest since Oct. 23.
The most-traded February copper contract on the Shanghai Futures Exchange edged up by 0.14 percent to 51,440 yuan ($8,500) a tonne, having touched its highest in five weeks.
Global manufacturing and business activity expanded in December, as euro zone businesses ended the year on a high thanks to a surge in new orders, though the rate of manufacturing growth slowed in the United States and China.
US manufacturing output rose for a fourth straight month in November as production increased almost across the board, the latest suggestion the economy is gaining steam. Still, prospects the Fed could begin winding in its stimulus program this month have dented commodities where ample liquidity has lubricated investment and industry.
Nearby tightness in LME futures has been exacerbated by a shortage in refined metal and falling LME stocks.
Cash copper traded at a $30 premium against the benchmark on Monday, which was its highest in more than 18 months.
Also, BHP Billiton said on Tuesday it would stop operations in the sub-level cave at its Perseverance mine due to safety concerns after a small earthquake at the Western Australian nickel mine in October. Global nickel supply is expected to hit fresh records with new projects coming on stream and existing operations ramping up output, the International Nickel Study Group said this month.
