London Copper Prices Slip While Tin Rallies Amid Indonesian Timah Stoppage
Singapore. London copper slipped on Wednesday after a three-day rally that pushed prices to a one-week high the previous session, although hopes of more action to combat Europe’s debt crisis continued to buttress the outlook for metal demand.
Improving risk appetite has helped copper solidify gains in recent days, with the prospect of a decisive euro zone rescue plan factored into prices and boosting confidence that one of China’s major export markets may not sink further into the mire.
China is the world’s biggest metals consumer and a string of data this week should shine a light on how well the government’s fine tuning measures are smoothing credit to the manufacturing sector.
“People are feeling that the US is starting to recover, we’re hearing positive talk out of the ECB about long term debt financing, and if they can convince people it’s the right action then we’ll see some support coming in for commodities,” said Jonathan Barratt, chief executive of BarrattBulletin, a Sydney-based commodity research firm.
Market participants expect the European Central Bank to start buying bonds to help contain surging borrowing costs for Spain.
Further hopes for easing were raised on the other side of the Atlantic, when Boston Fed Bank President Eric Rosengren said the central bank should launch another bond buying program of whatever size and duration is necessary to get the economy back on its feet.
Asian shares rose to a 3-month high and the yen started trading on the backfoot on Wednesday, although European shares opened weaker with traders showing some caution.
Three-month copper on the London Metal Exchange had slipped 0.79 percent to $7,520 a tonne by 0703 GMT, reversing gains from the previous session when it hit a one-week high and closed at $7,580 a tonne, its loftiest finish since July 19.
LME copper had gained 3.5 percent over the last three days, its biggest three-day rally in more than a month, but is still in negative territory for the year.
However, a trader said prices posted a solid close on Tuesday that could suggest the metal may look to challenge the top of its recent range. Prices have bounced between $7,200 and $7,800 since May.
The most-traded November copper contract on the Shanghai Futures Exchange closed flat at 54,700 yuan ($8,600) a ton.
In further signs of Beijing’s policies to bolster infrastructure investment and support growth in the face of a slowing economy, China has approved three local government investment vehicles to issue asset-backed securities (ABS).
China inflation and industrial production figures are due on Thursday and Chinese trade data will be released on Friday.
“If the Chinese data this week is steady — that’s all it has to be — you’ll probably find the price will trade higher,” said Barratt.
Spot prices of tin rallied against those further out after Indonesia’s Timah stopped selling tin on the spot market because of low market prices for the metal, cutting shipments this month from the world’s largest tin exporter.
The premium for cash tin over three months moved from a $16 discount to a $13 premium in Tuesday’s trade.
Spot shipments make up 30 to 40 percent of production at Timah, Indonesia’s largest tin miner, which was expected to rise to 40,000 to 45,000 tons of refined tin this year.
“Tin was the big winner on the day [finishing over 2 percent higher] on the back of news that Indonesian producers are withholding material from the spot market,” said RBC Capital in a note.
LME tin closed at $18,270 a ton, recovering 6.7 percent from one-year lows hit late last month, but slipped in line with other metals to $18,000 on Wednesday.