Copper Fluctuates in New York on 12-Week Low, Concern About Greek Crisis
Copper fluctuated in New York, rising as investors judged prices at a 12-week low slid too far before erasing the climb on concern about the possible spread of Greece’s financial crisis. Nickel trimmed a decline.
The most-active copper contract gained as much as 1.8 percent and slid as much as 1.9 percent on the Comex in New York. Advances were capped as the U.S. Dollar Index, a six- currency gauge of the greenback’s strength, increased for a fourth day to the highest level in a year.
“Pressure on prices should persist as long as there is still uncertainty on markets and the dollar sustains its strength,” Eugen Weinberg, an analyst at Commerzbank AG, said in a note today. Still, metals are likely to stabilize, he said.
Futures for July delivery fell 2.65 cents, or 0.8 percent, to $3.125 a pound at 8:22 a.m. on the Comex. Prices reached $3.0055 yesterday, the lowest intraday level since Feb. 11. Copper for delivery in three months dropped 0.9 percent to $6,893.50 a metric ton on the London Metal Exchange.
LME copper yesterday rounded out the largest two-day drop since January on concern that the financial crisis in Greece may widen to other European nations. Europe consumes 20 percent of the world’s copper output and between 15 percent and 25 percent of aluminum, zinc, nickel and lead production, according to Barclays Capital.
The dollar index added as much as 0.6 percent. Gains by the U.S. currency make dollar-priced metals more expensive in terms of other monies. The Greek crisis has helped to pull the euro down 11 percent against the dollar this year.
Greece’s Parliament today began debating austerity measures demanded by the European Union and International Monetary Fund as a condition of a 110 billion-euro ($140 billion) bailout.
Nickel dropped 1.3 percent to $21,650 a ton, rebounding from a slide of as much as 6.7 percent to $20,450, the lowest intraday price since Feb. 26. Prices are up 17 percent this year, the most among the six main metals traded on the LME.
Nickel fell as much as 16 percent yesterday, the most in intraday terms since October 2008. The metal for three-month delivery had climbed as much as 43 percent this year on signs of revived output of stainless steel, the main demand source.
“The price was overdone,” Leon Westgate, a Standard Bank Plc analyst in London, said by phone. “This year’s rally was driven by technical buying.”
Demand for refined metal might slow this year because of surging Chinese production of nickel pig iron, a less expensive alternative, according to Westgate. That may pull prices below $20,000 a ton, presenting a “buying opportunity,” he said.
In addition, stainless-steel producers in China may be switching output to reduce the content of nickel “as rising cost of nickel impacts upon their profitability,” Nic Brown, an analyst at Natixis Commodity Markets Ltd. in London, said in an e-mail.
Still, the 13 percent drop in nickel stockpiles in LME- monitored warehouses since this year’s peak in February will support prices, Brown said. Delays to new mines “mean that nickel supplies are substantially lower than had been anticipated,” he added.
Nickel for immediate delivery will average $25,350 a ton for the rest of the year, Brown said.
Inventories of copper tracked by the LME fell for an eighth day today, slipping 0.1 percent to 492,700 tons, the lowest level since Dec. 29. Stockpiles dropped in March and April. Bookings to remove metal from warehouses slid for a seventh day, declining 7.7 percent to 19,525 tons.
Volumes in copper across all trading platforms on the LME reached 198,768 contracts yesterday, the highest since March 25, according to LME data. A contract represents 25 tons of the metal, used in electrical equipment and construction.
Aluminum dropped 1.8 percent to $2,082 a ton and lead gained 2 percent to $1,978.50 a ton. Zinc fell 0.9 percent to $2,105 a ton and tin rose 0.1 percent to $17,600 a ton.