WebSify
Follow us on
Mail
Print

METALS-Copper drops to 1-1/2 month low as market awaits Fed

Source : REUTERS
Last Updated: Tue, Jun 18, 2013 16:30 hrs

* Investors suspect Fed may hint at stimulus withdrawal

* LME aluminium stocks hit new record for second day running

By Maytaal Angel and Harpreet Bhal

LONDON, June 18 (Reuters) - Copper fell to a 1-1/2 month low on Tuesday as investors waited for clarification from Federal Reserve Chairman Ben Bernanke on the central bank's plans for its monetary stimulus programme when a two-day policy meeting ends on Wednesday.

Also weighing on the metal was news that China's home price rises slowed for a second straight month in May from the previous month, in a sign that Beijing's attempts to bring stability to a frothy property market are having some effect.

China is the world's top consumer of copper, which is used extensively in building.

Benchmark three-month copper on the London Metal Exchange ended at $7,005 a tonne, down from a close of $7,082 on Monday. It earlier fell to its lowest since early May at $6,965 a tonne.

The Fed's bond-buying programme has underpinned global markets broadly but recent comments by Bernanke that he might slow the $85 billion monthly bond purchases if the U.S. economy improves has unnerved investors.

"Expectations the Fed might discuss early tapering of quantitative easing are putting downward pressure on prices, but fundamentally the market is directionless, demand is not growing strongly and supply is picking up," said Citi analyst David Wilson.

Elsewhere, news that Indonesia's government may decide this week on whether to allow Freeport McMoRan Copper and Gold Inc to resume open-pit mining at Grasberg, also dragged on copper.

Grasberg is the world's second largest copper mine. It has been shut since May 15, a day after a training area in a tunnel caved in, killing 28 workers.

That disruption, plus others in India and the United States, had been helping underpin copper. They include a landslide earlier this year hit output at Rio Tinto Ltd's Bingham Canyon mine in Utah.

"Supply losses so far, including Grasberg and Bingham Canyon, are still below recent trends," Wilson said.

Daily LME stocks data showed the copper market is well supplied, with stocks currently up 2,675 tonnes at 632,150 tonnes, their highest level in a decade.

In other metals, three-month aluminium ended at $1,841 from $1,844.50 on Monday, having hit a low of $1,832 a tonne earlier, near its weakest point since mid-May.

The aluminium sector, burdened by overproduction, was jolted after data showed an inflow of 68,725 tonnes of stocks into warehouses, which sent the total to a new record of 5.348 million tonnes.

"More (aluminium) stocks are heading into the LME, perhaps the last hurrah before the Fed starts to nudge rates higher," said Ed Meir, analyst at INTL FCStone.

Zinc closed unchanged at $1,858, tin closed at $20,075 from $20,400, nickel ended at $14,150 from $14,290 while lead was last bid at $2,090 from $2,108.50



blog comments powered by Disqus
most popular on facebook
talking point on sify finance