Copper steadies

Copper steadied on caution ahead of a meeting of Euro zone finance ministers to shore up their bailout fund, while a successful Italian government bond auction and ongoing supply constraints calmed sentiment and contained losses.

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Copper steadied on Tuesday on caution ahead of a meeting of Euro zone finance ministers to shore up their bailout fund, while a successful Italian government bond auction and ongoing supply constraints calmed sentiment and contained losses.

Three month copper on the LME traded at $7,495 a tonne at 13:01 SA time, in line with a last bid $7,495 a tonne on Monday. Prices are on track to post a third straight month of losses, down 7 percent so far in November.

“At this point, markets are clinging on to any bit of positive news they can. The key thing is sentiment,” analyst Andrey Kryuchenkov of VTB Capital said.

“There was some optimism (EU leaders) would come up with something ahead of the EU Summit Dec 9, even though we know these measures won't be heavy artillery - it won't include ECB becoming a lender of last resort or a Eurobond,” he added.

Euro zone finance ministers are to agree on Tuesday the details of bolstering their bailout fund to help prevent debt worries spreading in bond markets, under pressure from the United States and ratings agencies to staunch a two-year-old debt crisis.

Still, widespread scepticism over whether European policymakers will be able to prevent debt contagion was keeping traders on edge as prospects for improvement in demand ahead of year end continue to dwindle.

“The fact that more money is going to be thrown at Italy and there were some proactive comments coming out of the Germans yesterday, it seemed to be a more positive day... but today we're consolidating,” a London metals trader said.

Also underpinning sentiment as European shares turned briefly positive was a successful Italian bond auction. Italy managed to sell debt in volumes close to the upper end of its target range, albeit at record high auction yields.

More fundamentally, metals markets are looking ahead to a raft of manufacturing sector indicators due from China and Europe on Thursday.

Funding pressure continues to dog the metals complex, and could trigger a round of liquidation, said Credit Suisse Private Banking in a report.

“Indicators of funding stress particularly matter for the metals sector due to its capital intensity. In this context, recent comments by major miners like BHP Billiton... about end consumers facing tighter credit conditions hint at some caution,” it said.

BHP Billiton, the world's biggest miner, has turned more wary on the outlook for commodity markets as some players face tighter access to credit, Chief Executive Marius Kloppers told shareholders at the group's annual meeting in Australia this week.

“Any eventual deterioration in funding conditions could trigger fresh bouts of selling. Thus, from an investor's perspective, the near-term risk / reward does not look very favourable.”

COPPER SUPPLY SIDE

Copper's supply pipeline has been pressured by bad weather and industrial action this year, with a soon-to-end strike at Freeport-McMoRan's Peruvian copper mine Cerro Verde replaced by new industrial action in Chile.

Workers have decided to lift their nearly two-month-old strike at Freeport-McMoRan's Peruvian copper mine Cerro Verde and will return to their jobs on Wednesday, union leader Leoncio Amudio said on Monday.

But Chile's giant Collahuasi mine on Monday confirmed workers on two shifts have downed tools at the world's No. 3 copper mine, adding that its plants were fully operational, suggesting output was not affected.

A strike at Freeport's Indonesian mine Grasberg, the world's No. 2 copper mine has run into a third month, helping to curb exports of copper concentrate from the country, which fell by 35 pct on the year in October.

Across other metals, tin was at $20,700 from $20,850 on Monday's close while zinc, used in galvanising was at $1,952 from $1,957.

Battery material lead was at $2,033.50 from $2,025 and aluminium was at $ 2,021.50 from $ 2,026 .

Nickel was at $17,160 from $17,180. - Reuters

Source: http://www.iol.co.za/copper-steadies-1.1188743

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