WSJ: BASE METALS: Shanghai Copper Sharply Lower; Strong Dlr Weighs
SHANGHAI (Dow Jones)--Base metals on the Shanghai Futures Exchange settled mixed Friday, with copper and zinc falling sharply on the dollar's strength against the euro in Asia.
The benchmark April copper contract settled CNY1,620, or 2.2%, lower at CNY70,590 a metric ton.
Shanghai copper may consolidate with a downward bias next week as investors will likely lock in profits from the metal's recent rally, which many think was too fast and too sharp, analysts said.
The red metal dropped as much as 3.4% in late trade as the euro sank to a four-month low against the greenback amid lingering concerns over the euro zone's sovereign debt problems.
A strengthening dollar often weakens metal prices as dollar-denominated metals on the London Metal Exchange become more expensive for buyers holding other currencies, and pushes down SHFE, which tracks LME.
"Sentiment is pretty vulnerable these days (given current price level), so it is understandable that investors tend to over-react to market news, but a correction is inevitable and a consolidation mode may continue until the Lunar New Year holiday" which begins Feb. 2, said a Beijing-based analyst with a major brokerage.
Market participants said higher copper prices have deterred downstream users from restocking, which usually takes place before the Lunar New Year, though many don't have comfortable stock levels at the moment.
"So, relatively lower prices may help attract some buying if this correction can continue over the next few sessions," said the Beijing-based analyst, who tipped nearby support for copper at CNY68,000/ton.
Copper traded at the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, was quoted at CNY70,200-CNY70,350/ton, down from CNY70,700-CNY70,850/ton Thursday.
Three-month London Metal Exchange copper ended Thursday's afternoon kerb down $80 at $9,470/ton.
It was quoted 1.2% lower at $9,358/ton around 0700 GMT, when the SHFE closed.
The weekly SHFE inventory report showed copper stocks rose 275 tons on week to 132,166 tons, while aluminum stocks rose 1,432 tons to 442,601 tons. SHFE zinc stocks were up 5,331 tons at 316,066 tons.
Friday's settlement prices in yuan a ton and LME late kerb prices from Thursday in dollars a ton:
