Monday 3.21.11
* Copper hit by global economic recovery doubts
* China copper imports fall to 27-month low in Feb
* Three-day top eyed in COMEX copper
* Coming up: U.S. FHFA home price report Tuesday (Recasts, changes to New York dateline/byline, adds closing copper price, adds graphic and analyst comments)
By Chris Kelly and Rebekah Curtis
NEW YORK/LONDON, March 21 (Reuters) – Copper fell more than one-percent on Monday, failing to join in a broad-based equities rally as concerns about the sustainability of the global economic recovery began to bite.
A sharp reduction in China’s imports of the metal last month and an unexpected plunge in U.S. existing home sales added to the bearish tone, reflecting a worrisome short-term demand outlook from the red metal’s two-biggest customers.
“The reason why copper is not participating to the upside right now is there are too many unanswered questions,” said Adam Sarhan, chief executive of Sarhan Capital.
He cited the rise in crude oil prices and geopolitical tensions in the Middle East, monetary tightening measures in top-consumer China, and the uncertain outcome from Japan’s nuclear crisis as being the most troublesome issues facing the global recovery.
“Investors simply do not know if these events are going to derail the global economic recovery,” Sarhan said.
London Metal Exchange (LME) three-month copper shed $105 to close at $9,405 a tonne.
COMEX May copper closed down 5.30 cents, that is 1.2 percent, at $4.2860 per lb, near the bottom of its $4.2665 to $4.3685 range.
Prices are down about 8 percent from last month’s record highs at $10,190 per tonne and $4.6575 per lb.
“It’s technical in nature. You have a three-day top that has held,” said Scott Meyers, senior trading analyst with Pioneer Futures in New York, citing $4.36-$4.37 as chart resistance.
“From my standpoint, you’d want to see the 50-day moving average be repaired as the first sign of the chance to go higher,” Sarhan said.
Overnight, data showed China’s February imports of refined copper hit a 27-month low due to high stockpiles of the metal and holidays in the year’s shortest month.
Despite slack Chinese consumption, supply worries and buoyant copper demand projections were expected to boost prices longer term, Lars Steffensen, managing partner at Ebullio told the Reuters Global Mining and Steel summit on Monday.
“I think we’re going to have another stab at $10,000 if we break it. I think we could see $11,000, $11,500 this year,” he said. “I think there is a floor around $9,000 in the market.”
Investors also remained focused on Japan where the government, which has been juggling relief work with a race to avert catastrophe at a crippled nuclear plant, has yet to estimate the damage or say how much it may spend on reconstruction.
Economists are certain the cost will exceed that of a 1995 quake in Kobe, estimated at $100 billion, and base metals will be crucial to rebuilding efforts.
In other metals, aluminium rose to a session high of $2,604 a tonne before trimming gains to close up $10 at $2,570.
Pressuring prices, International Aluminium Institute data showed China bumped up its production of primary aluminium to a record high daily average of about 116,200 tonnes in February, from a revised 110,300 tonnes in January.
INVENTORIES
The bearish trend in LME copper warehouse stocks — up more than 23 percent since last December — continued Monday, with an 850-tonne build to 430,500 tonnes. Most of the deliveries were seen flowing into Singapore and Gwangyang warehouses, underlining physical market weakness in the Asian region.
Apparent demand for refined copper in China fell 12.5 percent in February as imports slowed and stockpiles held at the Shanghai Futures exchange grew, Reuters calculations based on the official Chinese data showed on Monday.
“There is a bit of a bullish and bearish struggle going on,” Christin Tuxen, an analyst at Danske Bank, said.
“Chinese import data coming out overnight showed copper imports declined quite significantly last month, and that is something that is holding base metals back, although you have a bullish factor on the other side with reconstruction in Japan.” (Additional reporting by Sue Thomas in London; editing by Alden Bentley)
Source: http://www.reuters.com/article/2011/03/21/markets-metals-idUSLDE72K0UF20110321
