* Investors watch for development of U.S. bank plan
* China demand, econ recovery to lift copper prices in 2010
By Rujun Shen and Edmund Klamann
SHANGHAI, Jan 27 (Reuters) - Copper prices were steady on
Wednesday, but remained under pressure from the firmness in the
U.S. dollar, as well as fears of further policy tightening in
China and proposed U.S. bank regulations.
A series of moves from China -- the world's top consumer of
industrial metals -- to limit excessive liquidity has triggered
a 6-percent decline in London copper prices from their peak of
$7,796 a tonne in early January.
"Metals prices are stuck in the conflicts -- if prices rise
much higher, policy may become tighter, but when prices fall
buying interest emerges," a Shanghai-based trader said.
Investors are also watching the development of the U.S.
plan to restrict risk trading at banks for further cues.
Paul Volcker, a member of the Obama administration's
economic team and a former chairman of the Federal Reserve,
will testify on Feb. 2 to a U.S. Senate committee on the latest
White House bank regulation proposals. [ID:nN26118051]
However, U.S. moves to stop banks trading for themselves in
markets and new rules on over-the-counter (OTC) trades are both
probably at least a year away, Societe Generale's global head
of commodities research said on Tuesday. [ID:nLDE60P15G]
Shanghai's benchmark third-month copper futures contract
SCFc3 ended up 0.3 percent to 59,540 yuan a tonne.
The most-active contract for May delivery SCFK0 was up
0.5 percent to 59,530 yuan a tonne.
Three-month copper on the London Metal Exchange MCU3 fell
$40 to $7,355 a tonne, extending losses from the previous
session when it was pressured by China's move to implement a
hike in bank reserves and a strong dollar.
The dollar index .DXY, a gauge of the currency's value
against a basket of currencies, was up 0.15 percent on
Wednesday.
"Copper prices are likely to move sideways in the range
between $7,300 and $7,600 a tonne, as confidence of investors
is being tested by policy moves," said Guo Yong, an analyst at
Jinrui Futures.
In the longer them, economic recovery and strong demand
from China are expected to propel base metals higher this year,
although tighter monetary and fiscal policies will weigh on
prices in the second half, a Reuters survey showed.
[ID:nLDE60P1E4]
Average cash copper prices will rise by 37 percent
year-on-year to $7,077 in 2010, while aluminium will gain 25
percent at $2,094, analysts said. [ID:nLDE60P1E4]
For the latest metals polls result, click COMMODITYPOLL01
Guo of Jinrui Futures also pointed out that a more than 20
percent cut in grid investment by China's leading grid
operator, State Grid Corp of China, was unlikely to have a
great impact on the country's copper demand this year.
[ID:nTOE60H046]
"At least some of 2010's demand comes from investment in
2009 due to delay between investment plans and actual
consumption of the metal. In addition, the lower consumption of
the grid can easily be replaced by rising demand in other
sectors," Guo said.
Shares in UC Rusal (0486.HK: Quote, Profile, Research), the world's largest aluminium
producer, fell sharply on their debut as a broad market slump
in the region and worries over the company's debt and legal
issues dogged its landmark $2.2 billion Hong Kong IPO.
[ID:nTOE60Q02O]
Base metals prices at 0701 GMT
Metal Last Change Pct Move End 2009 YTD pct
chg
LME Cu 7355.00 -40.00 -0.54 7375.00
-0.27
SHFE Cu* 59540.00 190.00 +0.32 59900.00
-0.60
LME Alum 2225.00 4.00 +0.18 2230.00
-0.22
SHFE Alum* 17000.00 25.00 +0.15 17160.00
-0.93
COMEX Cu** 332.90 -5.50 -1.63 332.75
0.05
LME Zinc 2303.00 -15.50 -0.67 2560.00
-10.04
SHFE Zinc 19270.00 75.00 +0.39 21195.00
-9.08
LME Nickel 18050.00 -150.00 -0.82 18525.00
-2.56
LME Lead 2185.00 -15.00 -0.68 2432.00
-10.16
LME Tin 17950.00 -25.00 -0.14 16950.00
5.90
LME/Shanghai arb^ -796
Dollar/yuan 6.8264 \ 6.8274
** 1st contract month for COMEX copper
* 3rd contact month for SHFE aluminium, copper and zinc
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
third month
(Editing by Himani Sarkar)
