LONDON: Copper fell 1 percent on Thursday,, Dec 23 taking a breather from record highs hit earlier this week, as end of year book-squaring and falling equities in top consumer China weighed on base metals.
By 1136 GMT, copper for three-month delivery on the London Metal Exchange traded at $9,263.25 a tonne from $9,350 at the close on Wednesday and compared with a low at $9,252.25.
The red metal, used in power and CONSTRUCTION [], lost ground for the second session running, and remained near record highs at $9,392 a tonne touched on Tuesday.
"You have thinning liquidity, which amplifies any fall," said Robin Bhar, analyst at Credit Agricole. "Looks as though traders are looking to square-up and take profits. "The rise that we had to a new record, was on the back of Collahuasi news...but this week and next week should see further profit taking."
Falling ore grades, disruptions and project delays mean that copper supply will, possibly starting this year, fall short of demand estimated at about 19 million tonnes this year.
Chile's giant Collahuasi copper mine is yet to find an alternative port for its shipments, after a port accident halted its exports. Its quest for a new export route may be hobbled by environmental and logistical hurdles.
In its latest monthly release, the International Copper Study Group said world refined copper consumption exceeded production by 436,000 tonnes between January and September this year.
Concern about supplies in the near term have pushed the metal into a $53 a tonne backwardation -- premium for cash material over the three-month contract -- compared with a discount of about $39 a tonne at the end of March.
"All we are seeing is end of year erratic, choppy trading," added Bhar on copper. "We see record highs next year."
''
CHINA STOCKS FALL
Shanghai and Hong Kong shares fell on Thursday as a cash crunch in the mainland's financial system weighed on the markets and a slowdown in trading activity kept investors on the sidelines
The falling stock markets in China hit base metals sentiment, although analysts remain bullish on copper next year, due to falling supplies.
"Weaker Asian equity markets are pushing the industrial metals down," Commerzbank analyst Eugen Weinberg said. "It is also normal to see a correction after record highs were touched earlier this week."
He added that erratic movements in industrial metal prices are to be expected as the year end approaches, with markets hampered by low liquidity levels.
Also depressing sentiment was a trend of growing LME copper inventories seen in most of December. On Thursday, copper stocks rose to 3,775 tonnes to a near two month high at 367,725 tonnes.
In other markets, the dollar fell against a basket of currencies, with the euro helped by supportive comments from China, but analysts said the outlook for the single currency was shaky, with fresh losses expected into 2011.
A Chinese Foreign Ministry spokeswoman said China was willing to help countries in the euro zone return to economic health and would support the International Monetary Fund bailout package for the bloc.
A weak U.S. currency makes metals priced in dollars less expensive for holders of other currencies.
Among other metals, aluminium traded at $2,449.25 versus $2,462. LME stocks for the metal, used in transport and packaging, jumped 5,775 tonnes to 4.28 million tonnes.
A large portion of those aluminium stocks are tied up in finance deals.
Steel-making ingredient nickel traded at $23,830 from $24,050 while battery material lead was at $2,430 from $2,440.
Russia's UC RUSAL has hired Bank of America Merrill Lynch to value its stake in Norilsk Nickel, an indication, an analyst said, that its owners are seriously considering sale.
Zinc traded at $2,303 a tonne from $2,330 and tin was at $26,600 from $26,825. - Reuters
By 1136 GMT, copper for three-month delivery on the London Metal Exchange traded at $9,263.25 a tonne from $9,350 at the close on Wednesday and compared with a low at $9,252.25.
The red metal, used in power and CONSTRUCTION [], lost ground for the second session running, and remained near record highs at $9,392 a tonne touched on Tuesday.
"You have thinning liquidity, which amplifies any fall," said Robin Bhar, analyst at Credit Agricole. "Looks as though traders are looking to square-up and take profits. "The rise that we had to a new record, was on the back of Collahuasi news...but this week and next week should see further profit taking."
Falling ore grades, disruptions and project delays mean that copper supply will, possibly starting this year, fall short of demand estimated at about 19 million tonnes this year.
Chile's giant Collahuasi copper mine is yet to find an alternative port for its shipments, after a port accident halted its exports. Its quest for a new export route may be hobbled by environmental and logistical hurdles.
In its latest monthly release, the International Copper Study Group said world refined copper consumption exceeded production by 436,000 tonnes between January and September this year.
Concern about supplies in the near term have pushed the metal into a $53 a tonne backwardation -- premium for cash material over the three-month contract -- compared with a discount of about $39 a tonne at the end of March.
"All we are seeing is end of year erratic, choppy trading," added Bhar on copper. "We see record highs next year."
''
CHINA STOCKS FALL
Shanghai and Hong Kong shares fell on Thursday as a cash crunch in the mainland's financial system weighed on the markets and a slowdown in trading activity kept investors on the sidelines
The falling stock markets in China hit base metals sentiment, although analysts remain bullish on copper next year, due to falling supplies.
"Weaker Asian equity markets are pushing the industrial metals down," Commerzbank analyst Eugen Weinberg said. "It is also normal to see a correction after record highs were touched earlier this week."
He added that erratic movements in industrial metal prices are to be expected as the year end approaches, with markets hampered by low liquidity levels.
Also depressing sentiment was a trend of growing LME copper inventories seen in most of December. On Thursday, copper stocks rose to 3,775 tonnes to a near two month high at 367,725 tonnes.
In other markets, the dollar fell against a basket of currencies, with the euro helped by supportive comments from China, but analysts said the outlook for the single currency was shaky, with fresh losses expected into 2011.
A Chinese Foreign Ministry spokeswoman said China was willing to help countries in the euro zone return to economic health and would support the International Monetary Fund bailout package for the bloc.
A weak U.S. currency makes metals priced in dollars less expensive for holders of other currencies.
Among other metals, aluminium traded at $2,449.25 versus $2,462. LME stocks for the metal, used in transport and packaging, jumped 5,775 tonnes to 4.28 million tonnes.
A large portion of those aluminium stocks are tied up in finance deals.
Steel-making ingredient nickel traded at $23,830 from $24,050 while battery material lead was at $2,430 from $2,440.
Russia's UC RUSAL has hired Bank of America Merrill Lynch to value its stake in Norilsk Nickel, an indication, an analyst said, that its owners are seriously considering sale.
Zinc traded at $2,303 a tonne from $2,330 and tin was at $26,600 from $26,825. - Reuters
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