Copper slips

Copper eased on Wednesday as the euro weakened on news that eurozone finance officials could delay Greece's second bailout and as physical demand from top buyer China remained subdued. Three-month copper on the London Metal Exchange closed at $8,370 a tonne, down 0.53 percent from Tuesday's close of $8,415 a tonne. EU sources said euro zone finance officials were examining ways of delaying parts or even all of the second bailout programme for Greece, while still avoiding a disorderly default.
"In the short-term the outlook for copper is weak; with this continuous stop-and-go with the Greek debt issue I wonder how the market can still stay quite supported," said Gianclaudio Torlizzi, partner at metals consultancy T-Commodity. "Fundamental support is also lacking from China: demand is not great and premiums are softening. I expect copper will fall about 5 percent by the end of this month." Depressing prices, the euro slid to its lowest in more than a week against the dollar on worries over the delay of the Greek bailout. A stronger dollar makes commodities priced in the US currency costlier for holders of other currencies.
Preventing further falls, China's central bank governor said the country would play a bigger role in solving Europe's problems and would continue to invest in euro zone government debt, while calling on Europeans to produce more attractive investment products for China.
Concerns about the outlook for growth in the euro zone however lingered as data showed output in the region shrank by 0.3 percent in the fourth quarter of 2011, as forecast, and will flirt with a mild recession under the weight of the sovereign debt crisis. Copper has fallen from a five-month high last week, but it is still up more than 11 percent so far this year.
"Generally speaking, the increase in metal prices since the beginning of the year would appear excessive - virtually all metals have seen two-digit growth rates so far - so a correction would not surprise us," Commerzbank analysts said in a note. Demand in China, the world's top copper consumer, has yet to pick up after its week-long Lunar New Year holiday late in January, in part due to lower order visibility on products for export to debt-laden Western economies.
January's total imports were 18.7 percent lower compared with a record high of 508,942 tonnes in December as public holidays slowed trade. Refined copper imports for January will be announced next week. China is likely to import less refined copper from the spot market in February and March due to plentiful stocks and weak demand, which are also weighing on Shanghai prices, industry sources said earlier this week.
In other metals, aluminium closed at $2,200 from Tuesday's close of $2,215. Aluminium stocks in LME-registered warehouses rose to a new record of 5,121,300 tonnes, with 11,025 tonnes of the metal going into warehouses in Vlissingen. Zinc, used in galvanizing, finished at $2,012 a tonne from $2,032 on Tuesday and nickel at $20,075 from $20,150. Battery material lead closed at $2,062 from $2,074.50 and tin at $24,595 from $24,350.