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Ardent Listener
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 Posted - 04/29/2008 : 14:48:14
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But read the whole thing..................A.L.
Copper Falls in London as Dollar's Gains Erode Appeal of Metals
By Chanyaporn Chanjaroen
April 29 (Bloomberg) -- Copper fell in London, snapping two days of gains, as a stronger dollar curbed the appeal of metals as a hedge against currency losses. Nickel and zinc slid.
Copper had a correlation of 0.63 to the dollar in the past month, more than triple the reading for last year. A figure of 1 would mean the two moved in lockstep. The dollar headed for its first monthly advance against the euro and yen since December.
``A lot of it is dollar related,'' Kevin Tuohy, a trader at MF Global Ltd. in London, said today by phone. ``It basically stopped any flow of fresh fund money into the market.''
The contract for delivery in three months dropped $100, or 1.2 percent, to $8,550 a metric ton as of 5 p.m. on the London Metal Exchange. MF Global is one of 12 companies that trade on the LME floor.
The dollar has declined 6 percent against the euro this year, helping to push copper up 29 percent in the period as investors switched into commodities. The weaker dollar capped profit at metals producers outside the U.S. as output costs rose and dollar sales shrank when converted into local currencies.
Copper stockpiles monitored by the LME fell 675 tons to 109,650 tons, the exchange said today, the lowest since Aug. 7. Combined with those in Shanghai and New York, inventories totaled 168,889 tons, a level last seen on Oct. 20, 2006, according to Bloomberg calculations. That's equal to about 3.3 days of global demand, below an average of 4.9 days last year.
Shrinking stocks cut supply of the metal. Copper for immediate delivery traded at a premium of $154.85 a ton above the benchmark three month contract, the highest since Aug. 13. In a market with ample supply, longer-dated futures are more expensive because of storage and interest costs.
`Extremely Poor'
``Metal availability right now is extremely poor,'' said Dan Brebner, an analyst at UBS AG in London, in a television interview today.
Chile, the world's largest producer of copper, has had a strike that shut down two mines since April 16 and faced a drought which may curb production because of a power shortage. The strike has reduced output at Codelco, the state-owned company, by about 19,000 tons, the company said today.
Copper output at BHP Billiton Ltd. fell 8 percent in the first quarter from a year earlier because of declines at Escondida, the world's largest copper mine, and Olympic Dam.
Eramet SA, operator of the world's largest ferronickel plant, said production at the Doniambo smelter in New Caledonia slid 11 percent to 13,055 tons in the first quarter from the same period a year ago.
Nickel fell $615, or 2.1 percent, to $28,675 a ton. The contract is heading for a second consecutive monthly decline on prospects of less usage from stainless steelmakers, the largest buyers of the metal.
Reduced Output
Shanxi Taigang Stainless Steel Co., China's largest stainless steel producer, will cut output of so-called 300-series stainless steel by 50 percent next month because of high stockpiles, President Chai Zhiyong said last week. Nickel is a main ingredient in the products. The company pared production by 30 percent in December.
Aluminum dropped $49 to $2,962 and zinc fell $60 to $2,245. Tin lost $175 to $23,725 and lead declined $54 to $2,711 a ton.
To contact the reporter on this story: Chanyaporn Chanjaroen in London at cchanjaroen@bloomberg.net
Last Updated: April 29, 2008 12:17 EDT
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