* China raises bank reserve requirements again
* Lead, zinc, nickel fall more than 6 percent
* Fears over Greek debt contagion linger
* Coming up: U.S. April nonfarm payrolls on Friday
(Recasts, add comments, closing prices, adds NEW YORK to
dateline, second byline)
By Frank Tang and Pratima Desai
NEW YORK/LONDON, May 4 (Reuters) - Copper tumbled to two-month
lows under $7,000 a tonne on Tuesday as China's monetary
tightening sparked demand fears and a global equities sell-off
prompted investors to dump industrial metals due to liquidity
concerns.
Sister metals zinc and lead hit multi-month lows, falling more
than 6 percent, against the backdrop of the fall in copper and
rising London Metal Exchange inventories. Nickel also sank more
than 6 percent as stocks increased.
The S&P 500 .SPX index fell 2.5 percent.
"You have the belt tightening in China and it looks like this
is going to continue as concerns about their property bubble are
developing elsewhere," said Sterling Smith, a senior analyst at
Minnesota-based brokerage Country Hedging Inc.
"China is one of the main drivers of keeping copper prices up
where they are. If the Chinese are not buying, you're going to be
able to build surplus very quickly, prices are going to be
vulnerable to downside moves."
Earlier this week, China -- the world's largest copper
consumer -- raised the proportion of deposits that lenders must
keep in reserve at the central bank, another step in its
months-old campaign to remove excess cash from the economy at a
time when inflation is on the rise. [ID:nTOE64100Q]
Benchmark copper CMCU3 on the London Metal Exchange closed
at $7,030 a tonne in kerb trading from $7,430 on Friday, having
earlier touched $6,998, its lowest since Feb. 25.
Copper posted its biggest one-day percentage fall -- about 5
percent -- since June 23, 2009, on the LME's electronic trading
system Select MCU3=LX. It has also broken through the 100-day
moving average of $7,330.
The euro tumbled to a one-year low against the dollar on
Tuesday on fears aid for Greece may not prevent debt crises in
other euro zone countries. A stronger dollar makes dollar-priced
metals costly for non-U.S. buyers. [USD/]
"People are very scared about the impact of potential
contagion from Greece. If it's inflationary, commodities should go
up (but) at the moment, the deflation camp is winning the
argument," said Lars Steffensen, managing director at UK fund
Ebullio.
Data out overnight showed HSBC's China Purchasing Managers'
Index (PMI) dropped in April to a six-month low of 55.4 from 57.0
in March as output, putting further pressure on copper.
[ID:nBJL002020]
"Copper is still up 100 pct year on year, if we are heading
into a period with tighter monetary policy in China then we might
see some further corrections," said Martin Vorgod, a trader at
Danske Bank.
On Tuesday, July copper's relative strength index (RSI) on a
14-day basis fell below 30, traditionally seen as oversold,
technical analysts said.
U.S. July copper futures HGN0 settled down 11.50 cents, or
3.5 percent, at $3.1785 an ounce.
STRONG WAREHOUSE DATA
On the plus side, there is a longer-term trend of falling
stocks in LME warehouses for some metals. Copper stocks are down
more than 58,000 tonnes since the middle of February to 496,975
tonnes, while aluminum stocks are down 111,200 tonnes since
hitting a record high above 4.640 million tonnes on Jan. 21.
Aluminum CMAL3, used in transport and packaging, ended at
$2,165 a tonne from $2,255 a tonne on Friday and zinc CMZN3 at
$2,148 a tonne from $2,282. Earlier zinc hit $2,141, a level not
seen since late February.
Zinc prices are under pressure from rising stocks, which at
559,475 tonnes are the highest since August 2005.
Battery material lead CMPB3 ended at $2,060 a tonne in kerb
trading from $2,230 on Friday, having earlier hit $2,067.25 on
Select, its lowest since late March.
Tin CMSN3 ended at $17,850 a tonne from $18,200 and
stainless steel material nickel CMNI3 ended at $24,650 from
$26,300, having earlier hit $24,500, it's lowest since early
April.
Metal Prices at 2:09 p.m. EDT (1809 GMT)
Metal Last Change Pct Move End 2009 Ytd Pct
move
COMEX Cu 316.90 -10.95 -3.34 334.65 -5.30
LME Alum 2165.00 -90.00 -3.99 2230.00 -2.91
LME Cu 7015.00 -415.00 -5.59 7375.00 -4.88
LME Lead 2055.00 -175.00 -7.85 2432.00 -15.50
LME Nickel 24350.00 -1950.00 -7.41 18525.00 31.44
LME Tin 17650.00 -550.00 -3.02 16950.00 4.13
LME Zinc 2130.00 -152.00 -6.66 2560.00 -16.80
SHFE Alu 16085.00 -125.00 -0.77 17160.00 -6.26
SHFE Cu* 58080.00 -570.00 -0.97 59900.00 -3.04
SHFE Zin 18060.00 -305.00 -1.66 21195.00 -14.79
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Marcy Nicholson in New York and Maytaal
Angel in London)
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