Copper edges up

Published Dec 6, 2013

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London - Copper edged up on Friday as tightening near-term supply kept the metal underpinned, though gains were capped ahead of US jobs data that could make or break the case for an imminent scaling back in US stimulus.

Uncertainty over when the Federal Reserve will curb its monetary stimulus has dominated trading direction in copper for months, and the main US jobs indicator - non-farm payrolls, due at 15:30 SA time - may yet tip the balance again.

This week markets have been nervous about an increased risk of tapering, after a string of US data came in above forecasts, including numbers for US private employers, factory output and GDP.

But putting a floor under copper prices, stocks on the London Metal Exchange have continued to fall, and are currently down to their lowest since mid February.

Also, cash copper is trading at a discount of just $2 a tonne to the benchmark three month price, indicating tight nearby supply.

“The market is concerned that (the Fed) might taper already in December. On the other hand if you look at copper inventories (they) already provide indications that the market has been oversold,” said Quantitative Commodity Research consultant Peter Fertig.

But he added: “I expect we remain range trading (in the first quarter). Even if the Fed is going to taper then it is because the economy is sufficiently strong. And China growth is accelerating but only slightly.”

Three-month copper on the London Metal Exchange rose 0.68 percent to $7,117.25 a tonne by 13:06 SA time, leaving the metal little changed on the week, and still set to post losses of more than 10 percent this year.

Copper has slipped in the past month towards the lower end of a range in place since early August of $6,900-$7,420 a tonne, as demand winds down into year-end and on prospects for a surplus next year.

The global market for refined copper swung into a 21,000 tonne surplus in August, rising after three straight months of a shortfall mostly due to higher production, the International Copper Study group said last month.

Offering nearer term support for copper, however, China is expected to post an increase in imports of major commodities in November compared with the preceding month, helped by stock building ahead of winter and after a week-long holiday disrupted shipments in October.

China is the world's top copper consumer, accounting for some 40 percent of global copper demand.

Elsewhere, Deutsche Bank AG pulled the plug on its global commodities trading business, cutting 200 jobs as it becomes the first major bank to exit the once lucrative sector due to toughening regulations and diminished profits.

In other metals, cash zinc prices continue to climb against 3-month prices, reflecting a shortfall in nearby supply.

Cash zinc traded at a $19.25 discount to the benchmark contract on Thursday, the narrowest since March.

Nickel prices hit the highest in nearly a month on Thursday at $13,918 a tonne and were also supported on Friday, up around half a percent at $13,814 a tonne on news that a ban on nickel ore exports from Indonesia will be upheld.

A domestic Indonesian miners' association said the country's mining industry will be killed off by a planned ban on unprocessed mineral exports, accusing the government of favouring international firms that can more easily adapt to the new rules. - Reuters

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