Copper steadies

Copper has steadied as concerns over sovereign debt in Europe and the worsening nuclear crisis in Japan undermined sentiment, but expectations of a supply deficit this year lent support.

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Copper steadied on Friday as concerns over sovereign debt in Europe and the worsening nuclear crisis in Japan undermined sentiment, but expectations of a supply deficit this year lent support.

Three-month copper on the London Metal Exchange was at $9,725 a tonne by 13:16 SA time, compared with $9,727 at the close on Thursday.

The market is headed for a rise of about 2 percent for the week ended Friday from last week's nearly three-month low of $8,944.50 following the March 11 earthquake and tsunami in Japan.

“One of the key concerns is the ongoing sovereign debt crisis in Europe. We have already seen some downgrades, and there is speculation that Portugal is going to ask for a bailout,” said Credit Agricole analyst Robin Bhar.

Standard & Poor's downgraded Portugal's credit rating by two notches to BBB on Friday and warned it could be cut again by one notch as early as next week, depending on the final shape of the euro zone bailout fund.

“The events in North Africa, the Middle East and Japan cause concern as well. But the fundamentals are still broadly supportive,” Bhar added, underlining that a strong copper supply deficit is expected this year.

Workers trying to cool a crippled Japanese nuclear plant were exposed to radiation levels 10,000 times higher than normal, officials said, but they played down suggestions that a reactor was leaking.

A slightly stronger dollar also weighed on base metals.

A weaker U.S. currency makes dollar-priced commodities more affordable for foreign investors.

“The market sees the recent price increases a little bit overdone,” said Eugen Weinberg, an analyst at Commerzbank. “A

somewhat stronger dollar is an excuse to take some profit today.”

COPPER INVENTORIES

Inventories of copper at the London Metal Exchange rose by 4,650 tonnes to 439,275 tonnes, hitting their highest since July 5, the latest data showed.

Rising inventories coupled with weakening premiums for spot copper raised some concerns over waning demand from top consumer China.

“If stocks rise too much it should be concerning, but it is normal at this time of the year for stocks to increase, looking at inventory cycles,” Weinberg said. Generally demand for copper is weaker in the first quarter and strengthens in the second

quarter of the year, he added.

“There were also some holidays in Asia in February, so imports dropped a bit; but it is not surprising.”

China's February import of refined copper tumbled 35.6 percent from the previous month to a 27-month low because of holidays in the shortest month of the year and high stocks, data released on Monday showed.

In other news, more than 600 workers at Zambia's Chinese-owned Chambishi Copper Smelter have downed tools, demanding a pay rise, bringing production at the 150,000 tonne per year plant to a halt, a union official said.

Tin was at $31,800 from $30,925, while zinc, used in galvanizing was at $2,402.25 from $2,424 Thursday's close.

Mitsui Mining and Smelting Co, Japan's top zinc smelter, said it would resort to imports of bare metal as its 110,000 tonne-a-year Hachinohe zinc smelter in northern Japan would probably remain shut for a while after the quake and tsunami damaged the facility.

Battery material lead was at $2,675 from $2,716, and aluminium was at $2,648 from $2,631. Nickel was at $27,150 from $26,825. - Reuters

Source: http://www.iol.co.za/copper-steadies-1.1047334

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