Copper slips on Europe, growth prospects support

LONDON: Copper fell on Monday, hurt by the Lunar New Year holiday in Asia and renewed political concerns in Europe, though the slide was kept in check by improved US and Chinese growth prospects.

Three-month copper on the London Metal Exchange, untraded at the close, was bid at $8,199 a tonne from $8,295 a tonne at the close on Friday, with volumes low as a result of the Lunar New Year which shut most Asian markets.

After spending much of January close to flat, copper last week rose more than 3 percent and hit its highest since Sept. 20 at $8,346 a tonne.

Three-month zinc, which hit its highest in one year on Friday at $2,218 a tonne, was hovering within sight of those peaks from September 2011, and trading in greater volume than copper.

Helping metals, the dollar was softer against a basket of currencies as the euro rose versus the US currency after a European Central Bank policymaker dismissed talk of intervening to weaken the euro.

But the euro remains susceptible to political and fiscal uncertainty in the euro zone. A weaker dollar makes metals less expensive for holders of other currencies.

Also limiting metals' falls, trade data late last week showed China's exports jumped a better-than-forecast 25 percent in January from a year earlier, while imports surged 28.8 percent, also ahead of analysts' estimates.

US trade data was also positive, showing the deficit shrank in December to its narrowest in nearly three years, and suggesting the economy did much better in the fourth quarter than initially estimated.

"Macro trends are pretty constructive, it would be strange (then) to have no conversion into underlying demand for metals - yes it's missing at the moment but we're hopeful, the signs are encouraging," said Societe Generale analyst Robin Bhar.

HOPES PINNED ON CHINA

Despite still ample supply in copper, as evidenced by the wide discount for cash copper over the three-month price, investors remain hopeful the Chinese will restock after the Lunar New Year.

China, which accounts for around 40 percent of refined copper demand, imported 350,958 tonnes of copper in January, up almost 3 percent from December as importers brought forward shipments to avoid delays during the week-long new year holiday.

"Before Chinese new year, we saw a small draw down in copper stocks from Shanghai which means Chinese consumers will probably come back for a bit more after the New Year. The only potential downside is any strength in the dollar," said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt's Bulletin.

Shanghai copper stocks have dropped for the past three weeks to 196,699 tonnes, down around 15,000 tonnes from nine-month peaks seen at the start of the year.

According to a Macquarie China copper survey, sentiment in the copper industry is strongest since at least June 2012, suggesting orders could improve strongly after the Chinese New Year.

Benchmark tin, untraded at the close, was bid at $24,850 a tonne, unchanged from the close on Friday.

Lead closed at $2,388 a tonne from $2,422, aluminium at $2,103 from $2,119, and nickel at $18,175 a tonne from $18,315.