Source: www.theaustralian.news.com.auCopper price buttressed by...

Source: www.theaustralian.news.com.au

Copper price buttressed by US data
Robin Bromby
January 22, 2007

ENCOURAGING economic news out of the US has helped arrest copper's price decline and strengthened the support for other base metals.
That, and falling stocks at the London Metal Exchange, saw three-month copper rise 0.7 per cent to $US5580 a tonne on Friday.
Reports from China at the weekend indicate that the country's copper imports will rise at a modest rate in the first quarter of 2007 as users replenish stocks.

Copper had been falling as stocks at the LME rose, but on Friday these levels were down 5275 tonnes to 192,975 tonnes.

And the market continues to be spooked by nickel stocks.

LME warehouses now hold just 4400 tonnes - about a day's global consumption of the metal. Three-month nickel was up 2 per cent to $US36,100/tonne. Zinc, lead and aluminium also rose, with tin ending Friday unchanged at $US11,400/tonne.

Former Commonwealth Bank commodities strategist David Thurtell, now with BNP Paribas, said from London that metals were propelled on Friday by tighter LME stocks and encouraging US economic data.

The University of Michigan US consumer confidence measure hit its highest level in three years, buoyed by lower oil prices and strengthening labour markets.

"The data suggest that consumer spending (or should we say OPEC?) could yet rescue the US economy from ravages of the housing downturn," Mr Thurtell said.

He said the highlight on the market was nickel, which had gained $US5000/tonne since January 9, helped by the possibility of a strike at Xstrata's Sudbury nickel operation in Canada.

Traders were also troubled on Friday by news that a container ship with 1000 tonnes of nickel on board was about to sink in the English Channel.

But the Napoli was last reported to be headed for grounding on the England coast and the cargo would be rescued, although subsequently it was found its nickel cargo totalled only 160 tonnes. Reports from London quoted one analyst at Triland Metals saying that $US35,000/tonne for nickel had turned from a resistance level to a support one, and the new price target was now $US40,000.

The Interfax China Commodities Daily reported that copper purchases were likely to rise in the next few months. China imported 111,159 tonnes of copper in December, the highest monthly level for 2006 - and 40 per cent up on November's import figure.

Shanghai copper futures have fallen 7 per cent since the start of the year but BNP said copper stocks there fell last week.

Meanwhile, tightening zinc supplies have prompted the Shanghai Futures Exchange to launch a futures trading contract for the metal, according to the China Daily.

Zinc was expected to be the first new product launched for 2007 by the SFE, joining copper and aluminium as commodities with domestically traded futures.

China is a huge consumer of zinc, the metal being used for galvanised steel and lead-zinc batteries. Zinc on the LME in 2006 rose 129.6 per cent due to tightening supplies.


End.

Cheers, Pie