LME copper steady; Greek debt talks eyed

Wednesday, 08 February 2012 10:09

SHANGHAI: Copper prices steadied in London on Wednesday, after two straight days of losses, while investors focused on the euro zone debt situation after Greece delayed yet again its decision on a bailout deal.

Three-month copper on the London Metal Exchange traded at $8,509 a tonne, up 0.3 percent, at 0255 GMT. Copper has notched up four consecutive weeks of gains, and has rallied almost 12 percent so far this year.

The most-traded April copper contract on the Shanghai Futures Exchange gained 0.6 percent to 60,410 yuan a tonne.

"Greece is still the major focus of the market, so any

negative news out of Greece could put pressure on metals prices," said analyst Judy Zhu of Standard Chartered in Shanghai.

Greek political parties delayed yet again on Tuesday making the tough choice of accepting painful reforms in return for a new international bailout to avoid a chaotic default, seemingly deaf to EU warnings that the euro zone can live without Athens.

"Also, people are waiting for January copper imports data from China later in the week. Consensus is that imports will be lower than record levels in December. It's hard to predict by how much - on one hand we had week-long holidays in January, but on the other we have seen imported stocks increase," she added.

China is the world's top copper consumer, accounting for around 40 percent of refined copper demand last year. Markets will be closely watching data out of China for indications on the health of the world's second largest economy amid a festering euro zone debt crisis.

Chinese imports of refined copper rose 18.3 percent in December on the month to a record high due to improved arbitrage and increased use of copper for financing purposes, but inflows fell 3 percent in 2011 from 2010 on low imports in the first half.

Also copper stocks in warehouses monitored by the Shanghai Futures Exchange surged by more than one third over two weeks in January, latest data showed, because of strong imports and slower consumption during the Lunar New Year holidays.

Chinese preliminary trade data is due on Friday. There is also Chinese inflation data scheduled for release on Thursday that may have implications for metals, Credit Suisse Private Banking said in a note.

"A further deceleration in inflation could open the door for additional cuts in the Reserve Requirement Ratio by the People's Bank of China. This in turn would be good news for cyclical assets such as industrial metals."

BHP Billiton, the world's biggest miner, said it expects "the rate of growth in steelmaking raw materials demand, particularly in China, to decelerate" in the longer term. The company reported its first half-year profit fall in two years on Wednesday, hurt by lower commodity prices and higher costs.

Glencore lost money on agricultural commodities in 2011 by trading volatile cotton markets and also saw the profitability of trading metals and oil remaining weak or declining, the commodities giant said.