Isra-Mart srl: Copper falls after US job data, Trichet speech

www.isramart.com

Copper fell on Thursday after an unexpected
increase in U.S. jobless claims last week and a warning by the European Central
Bank president about uncertain euro zone growth heightened concerns about the
impact on the global economy.
New U.S. jobless claims rose unexpectedly last week, further evidence of a
weak labour market just hours before President Barack Obama unveils a plan on
job creation in a major address to Congress on the issue.
Deepening concern over the state of the global economy and pushing the euro
down to a two-month low against the dollar, the ECB signalled interest rate
rises had been halted, and economic growth would be slow at best.

A stronger U.S. currency makes dollar-priced commodities such as base metals
costlier for holders of other currencies.
Benchmark copper on the London Metal Exchange was $9,050 at 1342
GMT, down 0.5 percent from a last bid $9,092 per tonne on Wednesday. It hit a
session low of $9,004 per tonne after the ECB comments, U.S. jobless claims
data, and on the stronger dollar.
"The very broad fear is that the economic slowdown may extend for longer
than expected," said Credit Suisse analyst Stefan Graber.
"The physical side of the market continues to be positive but increasing
funding stress will trigger institutions to reduce exposure to risky assets such
as base metals."
A two-day pay strike by workers at Peru's third-biggest copper mine Cerro
Verde increased worries about supply constraints, capping losses in price of the
metal.
Adding to supply-side worries, Freeport's Indonesia mine workers are set to
strike from Sept. 15 to Oct. 15 unless the company meets pay demands.

"Yesterday's rebound showed that the base metals market is still supported
by supply tightness and by resilient demand from all Asiatic countries," said
Gianclaudio Torlizzi from metals consultancy T-Commodity.
"Supporting this view is the fact that central banks in emerging countries
have many more tools available in terms of monetary policy compared with
developed countries and this, at least for the moment, will make them resistant
to the slowdown affecting the U.S. and the EU."
The economic growth worries bothering global markets were further
highlighted by an OECD report that warned central banks to brace for weaker
growth.
The Organisation for Economic Cooperation and Development said on Thursday
that developed countries face a sharp year-end slowdown led by a contraction in
Germany.
Investors are keenly awaiting Obama's speech and one by Federal Reserve
Chairman Ben Bernanke at 1730 GMT.


NICKEL SUPPLY
Indonesia's industry ministry said the country may impose a tax or quota on
mineral ore exports ahead of a planned regulation to ban all exports of raw
minerals by 2014. This will squeeze supplies of metals, including nickel, and
support prices.
"The Indonesian tax points to a tighter supply picture than previously
expected, that is helping to stabilize nickel prices," Graber said.
"Nickel demand has actually surprised on the upside and (stainless) steel
production has been more resilient than expected. We are now at a price level
where nickel pig iron producers are less competitive."
Also pointing to improved demand for the metal, inventories of nickel in
LME-approved warehouses fell to their lowest since February 2009 at $99,180
tonnes. This compares with a record high at more than 166,000 tonnes hit on Feb
2010.
Nickel , used in stainless steel production, was $21,686 from
$21,775 at the close on Wednesday. Earlier, it hit its highest in more than a
week at $21,950 per tonne.
Tin was $24,350 from $24,375 while zinc was $2,233 from
$2,240. Lead was $2,421 from $2,415 and aluminium was $2,403
from $2,404 at the close on Wednesday.