Metals - Copper drifts on concerns China might raise rates to cool economy
04.19.07, 6:47 AM ET
forbes.com
LONDON (Thomson Financial) - Copper drifted lower in midmorning trade on the LME, taking its lead from Shanghai, where prices closed down by their 4 pct daily limit on concerns China might raise interest rates to cool its overheating economy.
The concerns were sparked by the release of Chinese GDP data, which showed the economy grew by an annual 11.1 pct in the first quarter. The rise was ahead of market expectations.
'Markets are choppy this morning following a modest rise in risk aversion. The catalyst for this is talk that today's GDP report in China (which printed at 11.1 pct) will lead to another rate hike, depressing commodity demand in the medium to long term,' said JP Morgan analyst Michael Jansen.
He added, however, the data also reinforces the fact that 'current conditions from the demand side are extremely positive'. China is the world's largest copper consumer.
At 10.22 am, LME copper for 3 month delivery was at 7,963 usd a tonne in SELECT electronic trades, down from the kerb close of 7,980 usd a tonne yesterday.
Traders were monitoring developments at Free-port-McMoRan's Grasberg mine in Indonesia, where workers yesterday began a protest rally to demand better wages and welfare.
News reports out in Asia earlier quoted the country's energy minister as saying the mine was still running, but well below capacity. Grasberg is one of the world's largest copper and gold mines.
Analysts said the market was not rallying on the Grasberg news because it had already been priced in on Tuesday, when copper shot up to a 7 month high on expected supply disruptions at Grasberg.
Elsewhere, tin edged up as the market recovered from a loss of 7.7 pct yesterday, which was sparked by news Indonesia has approved export permits to two more smelters, including PT Koba Tin, the country's second largest producer.
The news indicated supply from Indonesia, the world's second largest tin producer, is recovering after having been disrupted for much of this year because of a government crackdown on illegal tin mining.
Tin was up at 13,800 usd a tonne against a kerb close of 13,700 usd yesterday. Nickel was also up, trading at 48,250 usd a tonne against 47,900 usd, while lead was flat at 1,980 usd a tonne.
Other metals were lower, with aluminium down at 2,865 usd a tonne against 2,878 usd and zinc down at 3,650 usd a tonne against 3,680 usd.
maytaal.angel@thomson.com |
