* Traders see Shanghai bonded copper stocks around 530,000T
* ShFe copper backwardation hits highest in one month
* Coming Up: U.S. non-farm payrolls July; 1230 GMT
(Adds analyst, trader comment)
By Melanie Burton
SINGAPORE, Aug 3 (Reuters) – London copper steadied on
Friday but was still set for its biggest weekly loss in two
months after European Central Bank inaction disappointed markets
and as worries over global growth dragged on the outlook for
metals.
Commodity prices fell on Thursday and copper hit six-week
lows after ECB President Mario Draghi failed to offer immediate
action to shore up the fragile euro zone economy which the
market had expected to come via an announcement of large scale
bond purchases.
That followed a string of dismal manufacturing sector
reports from China, Europe and the United States this week, with
only a small gleam of improvement seen in China’s small- and
medium-sized private sector companies.
China accounted for more than 45 percent of global
commodities demand, and 40 percent of refined copper consumption
last year, and infrastructure spending is expected to lend some
support to copper prices.
“Of course the export market is one of the driving forces of
the Chinese economy, but don’t forget about China’s
infrastructure investment plans,” said commodities analyst
Bonnie Liu of Macquarie in Singapore.
“We are quite constructive about the Q4 outlook. We see
lower prices as a buying opportunity. Demand is slowly but
steadily improving,” she added.
China will hike railway spending by 64 billion yuan ($10
billion) to 580 billion yuan in 2012, the Ministry of Railways
said this week, updating an investment plan published this
month.
Three-month copper on the London Metal Exchange
traded at $7,348 a tonne by 0305 GMT, up 0.25 percent from the
previous session, when it hit its lowest since June 22.
Prices have dropped more than 3 percent this week, on track
for their biggest weekly decline in two months.
The most-traded November copper contract on the Shanghai
Futures Exchange slipped 1.41 percent to 53,880 yuan
($8,500) a tonne.
The European Central Bank indicated on Thursday it may again
start buying government bonds to reduce crippling Spanish and
Italian borrowing costs but the conditions it set and the
dissenting voice of its key German member disappointed markets.
ECB President Mario Draghi indicated that any intervention
would not come before September — and only if governments
activated the euro zone’s bail-out funds to join the ECB in
buying bonds.
Focus has now shifted to the key U.S. non-farm payrolls
data, due later in the day. The data is likely to show U.S. job
growth picked up slightly in July, not enough to change
expectations of more help from the Federal Reserve to stimulate
the faltering economy.
MARKETS NEWS
There were signs of renewed interest in Shanghai copper
with rising premiums for nearby material against that further
forward.
The August contract traded 490 yuan higher than the
November contract at 0316 GMT.
Still, a Shanghai-based trader said there was not a huge
uptick in enquiries from users of metal.
“Fundamentals are not really showing much improvement in the
last couple of weeks. Domestic inventories are only slowly
declining, so it doesn’t really give a lot of support for prices
to rally further,” he said.
Two industry sources said they saw stockpiles in bonded
warehouses in China at around the 530,000-tonnes mark, down
from an estimate of 550,000 tonnes in early June.
ANZ pointed to the potential for further price falls ahead,
based on chart analysis.
“We see potential for further weakness, down towards
USD7,250 based on chart patterns, but fundamentals are more
neutral,” ANZ said in a research note.
PRICES
Base metals prices at 0305 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7348.00 18.00 +0.25 -3.32
SHFE CU FUT NOV2 53880 -770 -1.41 -2.67
HG COPPER SEP2 331.50 2.45 +0.74 -3.52
LME Alum 1851.00 7.00 +0.38 -8.37
SHFE AL FUT NOV2 15250 -65 -0.42 -3.76
LME Zinc 1820.50 8.50 +0.47 -1.33
SHFE ZN FUT NOV2 14555 -15 -0.10 -1.62
LME Nickel 15359.00 109.00 +0.71 -17.91
LME Lead 1865.75 11.75 +0.63 -8.32
SHFE PB FUT 14860.00 -45.00 -0.30 -2.78
LME Tin 17600.00 170.00 +0.98 -8.33
LME/Shanghai arb^ 708
Shanghai and COMEX contracts show most active months
($1=6.3674 Chinese yuan)
(Reporting by Melanie Burton; Editing by Clarence Fernandez)
