RTRS: Copper shrinks from record highs as dollar gains
* Copper eases from record $9,044/T
* China official paper says rate rise likely this weekend
* Technicals point to weaker copper prices [TECH/C]
(Recasts, updates prices, adds comment, pvs Singapore)
By Marie-Louise Gumuchian
LONDON, Dec 8 (Reuters) - Copper prices eased on Wednesday
after hitting a record high above $9,000 a tonne in the previous
session as a firmer dollar prompted more investors to sell the
red metal and worries of potential rate hikes in China weighed.
Three-month copper on the London Metal Exchange CMCU3 fell
to $8,838 a tonne by 1107 GMT. The metal used in power and
construction ended at $8,880 on Tuesday after hitting a record
high of $9,044 earlier in the day.
"Investors are taking profit after yesterday's price rally,"
Daniel Briesemann, analyst at Commerzbank, said. "There's also
been some interesting news out of China ... There might be
something imminent on that side."
An official newspaper said on Tuesday China is likely to
raise interest rates in the coming days in a demonstration of
the government's resolve to tame inflation. [ID:nTOE6B602F]
An increase in rates would also put flesh on the bones of
Beijing's announcement late last week that it was switching to
a "prudent" monetary policy from the "appropriately loose"
stance of the past two years. [ID:nTOE6B2062]
Fears of an interest rate hike in China have stoked worries
about demand from the world's top copper consumer.
The dollar extended gains on Wednesday on a spike in U.S.
Treasury yields as a proposed extension of tax cuts raised
growth expectations for the U.S. economy. [USD/]
A stronger dollar makes metals more expensive for holders of
other currencies.
Meanwhile, investors kept an eye on a dominant position
controlling between 50 and 80 percent of cash warrants for both
copper and nickel, subject to LME lending guidance. Large holdings of London Metal Exchange stocks can occur
unintentionally and are not unusual for large companies with
many divisions and clients that delve into metals markets.
[ID:nLDE6B51X4]
A lack of copper supply from December has underpinned prices
of the three-month contract, with the price of metal for nearby
delivery having traded at a premium against the benchmark
contract since early November. [ID:nLDE6AP1YU]
While the premium has softened a little this last week, on
expectations demand will moderate into the year end as
inventories are downsized for cash and tax purposes, it still
remains at lofty levels. MCU0-3
BASE METALS ETC
ETF Securities said on Tuesday it would launch the first
physically backed exchange-traded products (ETP) for base metals
from Friday, although markets are concerned such products could
act as a distortion on prices. [ID:nLDE6B61QR]
Last month Britain's financial services regulator said it
had received a complaint over plans for base metal ETPs,
reflecting fears ETPs could tip an already tight copper market
into a large deficit. [ID:nLDE6A70YE]
In general stocks of copper at LME warehouses have declined
since February, indicating a pick-up in demand and against a
backdrop of tight supply. <0#LME-STOCKS>
The latest data showed stocks fell 1,125 tonnes to 350,250
tonnes, on their way to the biggest annual decline in six years.
However traders and analysts saw room for more correction in
prices the short term after Tuesday's rally, given continued
broader worries about the euro zone's ability to keep debt
problems from spreading.
"The launch of ETCs and the tightness in copper are bullish
factors, but are not fundamental drivers," Basemetals.com said
in a note. "And therefore with the overall worrying economic and
fiscal backgrounds and with the potential for China to tighten
monetary policy further, we feel the markets are likely to
correct further."
Among other metals zinc CMZN3 fell to $2,250.25 from
$2,305. Lead CMPB3 traded at $2,362.50 from $2,398 a tonne,
while nickel CMNI3 was at $23,889 from $24,095 a tonne.
Aluminium CMAL3 traded at $2,311 from $2,305 a tonne. Tin
CMSN3 was at $25,450 from $25,100.
Metal Prices at 1108 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices
in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct
move
COMEX Cu 403.20 -1.55 -0.38 334.65 20.48
LME Alum 2300.00 -5.00 -0.22 2230.00 3.14
LME Cu 8870.00 100.00 +1.14 7375.00 20.27
LME Lead 2380.00 -18.00 -0.75 2432.00 -2.14
LME Nickel 23800.00 -295.00 -1.22 18525.00 28.48
LME Tin 25200.00 100.00 +0.40 16950.00 48.67
LME Zinc 2275.00 -30.00 -1.30 2560.00 -11.13
SHFE Alu 16200.00 -130.00 -0.80 17160.00 -5.59
SHFE Cu* 65350.00 -1130.00 -1.70 59900.00 9.10
SHFE Zin 17925.00 -410.00 -2.24 21195.00 -15.43
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
