METALS- Copper steadies ahead of crucial vote in Italy
Copper steadied on Tuesday ahead of a vote on public finances in Italy that may give more clues about the development of the sovereign debt crisis in Europe, which is hindering economic growth and clouding the base metals demand outlook.
Italian bond yields ticked higher on Tuesday closing in on unsustainable levels as lawmakers in Rome readied for a crucial vote on public finances which could sink Silvio Berlusconi's government.
Benchmark copper on the on the London Metal Exchange was 0.6 percent to $7,870 a tonne by 0952 GMT, from a close at $7,825 per tonne on Monday.
The metal, used in power and construction, was up about 18 percent since the beginning of October but was still more than 20 percent down from a record high of $10,190 hit in February.
"The market is watching Italy; that is what is driving the sentiment in financial markets," said BNP Paribas analyst Stephen Briggs.
"Looking at fundamentals the strikes at Grasberg and Cerro Verde are ongoing but there does not seem to be any change or improvement so the focus will be on Europe. We will be watching the vote carefully this afternoon."
The strike at Freeport McMoRan's FCX.N Grasberg copper mine in Indonesia is now in its eighth week and the majority owner and operator of the mine declared partial force majeure last week.
The union at Peru's No. 3 copper mine Cerro Verde said talks held on Friday yielded no progress toward ending an indefinite strike as a bitter labour dispute dragged on for more than a month.
Strikes at these large copper mines cut production and fuelled concerns about supply tightness but with uncertainty over economic growth worldwide and fears of a slowdown in top metals consumer China, investors were focusing more on macro factors, analysts said.
MILD RESTOCKING
Little support came from Greece's attempts to form a government under a new prime minister, under pressure from the European Union to push through a bailout to save the country's finances and end the chaos threatening the euro.
"The global economic slowdown continues and the risk of policy errors related to the sovereign debt crisis in Europe is limiting the appetite for metals," Credit Suisse said in a research note.
"We argue that specific data to industrial metals is mostly supportive for prices. For instance, inventories at the London Metal Exchange continued to fall for most markets, which hints at firm physical demand."
Inventories of copper in warehouses monitored by the London Metal Exchange fell 3,000 tonnes to 412,325 tonnes, their lowest since February and more than 12 percent down from the beginning of October, latest data showed.
This points to a pick up in physical copper demand from buyers, especially in China, which consumed 40 percent of the global supply in 2010.
"I think there is evidence that material has been moving into China; the decline of LME stocks was mainly from warehouses in Eastern Asia," Briggs said.
"There has been a pick up in imports of copper from China, probably not as rapid as some analysts may have hoped but there is clearly some restocking going on in China."
In other metals, tin was at $22,075 from $22,000 while zinc , used to galvanize steel was at $1,971.75 from $1,952 Monday's close.
Battery material lead was at $2,033.50 from $2,010 and aluminium was at $2,136 from $2,121.
Nickel was at $18,700 unchanged from Monday's close.
Metal Prices at 1002 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Pct Move End 2010 Ytd Pct
move COMEX Cu 356.45 2.90 +0.82 444.70 -19.84 LME Alum 2134.50 13.50 +0.64 2470.00 -13.58 LME Cu 7872.25 47.25 +0.60 9600.00 -18.00 LME Lead 2032.25 22.25 +1.11 2550.00 -20.30 LME Nickel 18677.00 -23.00 -0.12 24750.00 -24.54 LME Tin 22000.00 0.00 +0.00 26900.00 -18.22 LME Zinc 1969.25 17.25 +0.88 2454.00 -19.75 SHFE Alu 16235.00 -40.00 -0.25 16840.00 -3.59 SHFE Cu* 57840.00 -110.00 -0.19 71850.00 -19.50 SHFE Zin 15325.00 -20.00 -0.13 19475.00 -21.31 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Editing by Keiron Henderson)