By Silvia Antonioli
LONDON — Copper was steady on Thursday, after a 2 percent fall the previous session, and was on track for a 10 percent increase this quarter, although doubts over demand in China and over the pace of economic recovery in the U.S. made investors cautious.
Benchmark copper on the London Metal Exchange (LME) traded at $8,330 a tonne in official rings, little changed from a close of $8,349 on Wednesday.
The metal, used in power and construction, started the week on a strong note after the Federal Reserve suggested further monetary easing could not be ruled out.
It pared gains later in the week as data showed new orders for long-lasting U.S. factory goods were weaker-than-expected, casting doubt on the pace of recovery in the world’s largest economy and raising concerns about base metals demand growth rate.
The red metal is now on track for a 10 percent increase this quarter after having risen as much as 15 percent in February. Tin, the best performing metal so far, was on course for a 17 percent quarterly increase, zinc for a 8 percent rise while aluminium was up 6 percent on the quarter.
“Copper this quarter is in the middle of the pack. All these base metals will show reasonable growth this year; not as good as last year, but reasonable, and the second quarter is seasonally stronger for manufacturing around the world,” said Nick Moore, an analyst at RBS.
“For all base metals there is a supply surge underway but copper risks another handsome supply shortage and we know China is structurally short. They need to import millions of tonnes.”
The biggest losers were lead, down 3 percent on the quarter, and nickel, down 6 percent – some of the most heavily supplied markets.
“LME inventories of nickel have risen sharply to eight-week’s worth of consumption and we expect a 50,000 tonnes surplus in 2012,” Moore said. “It’s a fully supplied market and new projects are coming on stream.”
The stainless steel component earlier hit its lowest since Dec. 15 at $17,440 a tonne while battery material lead fell to a session low of $1,960, its lowest since Jan.9.
Investors were eyeing U.S. job data to be released later on Thursday for more clues on the state of the U.S. economy.
They found some relief in easing Italian borrowing costs at auction on Thursday.
ZINC OUTLOOK GLOOMY
Prices of zinc overtook lead this month for the first time since September 2011, reversing the traditional relationship, despite ballooning LME zinc inventories .
Zinc stocks in warehouses monitored by the London Metal Exchange (LME) jumped to the highest in nearly 17 years on Wednesday, climbing steadily after years of market surpluses.
“The fundamental outlook is becoming increasingly gloomy on the zinc market,” said Commerzbank in a research note.
“There is no likelihood of these high stocks being significantly reduced in the foreseeable future, for the global zinc market, which has been in surplus since 2007… Because zinc is used mainly in the galvanization of steel, zinc demand could decline as growth in the steel industry becomes less dynamic.”
Zinc, untraded in rings, was bid at $1,991 from $2,000 at Wednesday’s close while battery material lead traded at $1,977.5 from a last bid of $1,986 on Wednesday.
Tin traded at $22,375 from $22,425 and aluminium , untraded in rings was bid at $2,146 from $2,196.
Nickel, also untraded in rings, was bid at $17,460 from $17,575.
© Thomson Reuters 2011