* Copper unimpressed by Bernanke comments on easing
* LME copper signals mixed -technicals
* Coming Up: U.S. jobless claims, weekly; 1230 GMT
(Adds comments, details; updates prices)
By Rujun Shen
SINGAPORE, April 26 (Reuters) – London copper edged lower on
Thursday, unimpressed by the U.S. Federal Reserve’s reassurance
on the chance of more monetary stimulus, as the market was torn
between a lackluster picture of demand from top consumer China
and a squeeze in London.
Copper rose to a two-week high after the Fed gave a brighter
economic outlook, while Fed Chairman Ben Bernanke’s comment that
quantitative easing was still on the table failed to excite
copper investors.
Quantitative easing raises the inflation outlook and helps
increase asset prices. Economists at most major Wall Street
firms believe there is a less then 30 percent chance that the
Fed will undertake another massive round of monetary stimulus, a
Reuters poll showed.
“Bernanke’s comments on the possibility of QE3 (the third
round of quantitative easing) is biased towards being bullish
for copper, but its effect is rather limited after the prospects
of more QE have been diminishing over the past month or two,”
said Fang Junfeng, an analyst at Shanghai CIFCO Futures.
Fang expected Shanghai prices to range between 56,000 yuan
and 59,000 yuan for the foreseeable future.
Three-month copper on the London Metal Exchange
edged down 0.1 percent to $8,195 a tonne by 0421 GMT, after
hitting a two-week high of $8,225 in the previous session.
The most-traded July copper contract on the Shanghai Futures
Exchange gained 0.6 percent to 57,930 yuan ($9,200)a
tonne.
Trading volume is likely to thin out ahead of a
holiday-laden week in Asia, as China’s market will be closed on
Monday and Tuesday, and Japan shut on Thursday and Friday.
CHINA PICTURE VS. LME SQUEEZE
The total open interest in Shanghai copper gained 6,392 lots
to 512,758 lots, after counting both buying and selling
transactions, having fallen for two straight sessions from an
all-time high of 544,076 lots hit earlier this week.
The Shanghai copper curve flipped back into a small contango
from backwardation in the previous session, while the premium in
London cash to three-month copper prices shot up to $108, edging
closer to $114 hit last week — its highest since August 2008.
The tightness in the spot market was also reflected in an
eight-year high in the ratio of cancelled warrants to total LME
stocks, at 42.19 percent, while the total stockpile
is near its lowest level since late 2008.
But some traders and analysts said it had little to do with
the sluggish demand picture in China, but was caused by an
artificial supply squeeze due to some large trading houses
holding dominant positions on the LME.
“The views on price moves are very contradictory and that’s
why you see rather high open interest in Shanghai — people who
look at fundamentals believe that prices should head south while
those who think the short squeeze will continue expect prices to
rise,” said a Shanghai-based trader.
Base metals prices at 0421 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8195.00 -10.00 -0.12 7.83
SHFE CU FUT JUL2 57930 340 +0.59 4.64
HG COPPER MAY2 370.35 0.35 +0.09 7.79
LME Alum 2077.00 2.00 +0.10 2.82
SHFE AL FUT JUL2 16150 05 +0.03 1.92
LME Zinc 2006.00 0.50 +0.02 8.73
SHFE ZN FUT JUL2 15525 25 +0.16 4.93
LME Nickel 17675.00 70.00 +0.40 -5.53
LME Lead 2086.25 -4.75 -0.23 2.52
SHFE PB FUT 15755.00 35.00 +0.22 3.07
LME Tin 22000.00 75.00 +0.34 14.58
LME/Shanghai arb^ 2497
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
($1=6.3041 Chinese yuan)
