Farallon Resources Ltd. (fka FRLIF)

[the cork]

Zinc dips, Copper Fluctuates in New York on Dollar Movement and U.S. Rebound Concern

By Chanyaporn Chanjaroen - Aug 23, 2010 5:49 AM PT

Copper fluctuated in New York and London as the dollar swung between gains and losses and investors looked ahead to figures due this week that may signal a weakening U.S. economic rebound.

The U.S. Dollar Index, a six-currency gauge of the greenback’s strength, erased a drop of as much as 0.3 percent before slipping again. Reports this week may show that sales dropped for existing homes in the U.S. and were unchanged for new dwellings. The country is the world’s second-largest consumer of copper after China.

“The negative sentiment regarding the U.S. recovery and ongoing doubts over China’s demand resumed their influence over markets last week and will likely hang over them again this week,” Alex Heath, head of London Metal Exchange trading at RBC Capital Markets in London, said in a daily report.

Futures for December delivery were little changed at $3.312 a pound at 8:27 a.m. on the Comex in New York. The contract gained as much as 0.6 percent and slid as much as 0.5 percent. Copper for three-month delivery climbed 0.3 percent to $7,279 a metric ton on the LME.

Gains by the U.S. currency make dollar-priced metals more expensive in terms of other monies. The dollar index has advanced 6.6 percent this year, contributing to LME copper’s 1.5 percent drop.

Figures due tomorrow from the National Association of Realtors will show July sales of existing homes in the U.S. plummeted 12.9 percent from June, the biggest monthly loss of 2010, according to the median estimate of economists surveyed by Bloomberg. A report on Aug. 25 may show that sales of new homes in the country were unchanged last month.

Chinese Imports

Construction accounts for a quarter of copper demand, according to the Copper Development Association.

Imports of refined copper into China dropped 23 percent from a year earlier to 224,723 tons in July, according to customs data today. Shipments gained 6 percent from June.

Hedge-fund managers and other large speculators cut their net-long position, or bets on higher prices, in New York copper futures in the week ended Aug. 17 by 13 percent to 14,479 contracts, according to U.S. Commodity Futures Trading Commission data.

LME-monitored copper stockpiles expanded 0.1 percent to 402,200 tons, paring this year’s drop to 20 percent. Canceled warrants, or orders to draw metal from LME-registered warehouses, fell 2.5 percent to 30,650 tons.

Including metal tracked by exchanges in Shanghai and New York, copper inventories totaled 604,080 tons, or about 12 days of global consumption based on Royal Bank of Scotland Group Plc’s estimate for demand this year of 18.2 million tons. That’s down from almost 14 days at the start of 2010.

Aluminum ‘Squeeze’

Aluminum for three-month delivery on the LME added 0.9 percent to $2,058.75 a ton. The borrowing fee for next-day delivery, the so-called tom-next spread, widened as far as $9 a ton per day, matching the 22-month high level traded Aug. 19, after closing at $1 on Aug. 20. The wider spread signals low availability of the lightweight metal for nearby dates.

“There’s a squeeze going on,” Dan Brebner, head of metals research at Deutsche Bank AG in London, said today by phone. Between 70 percent and 80 percent of LME aluminum stocks are held under rental and financing accords, meaning the metal is tied up and can only be released when related contracts expire, he said.

Global aluminum production may outpace demand this year more strongly than predicted because of expansion led by China, the biggest supplier and consumer, said Sumitomo Corp., Japan’s third-largest trading house.

Sumitomo increased its forecast because output in China “appears to be greater than we expected earlier this year,” Motoi Kamitani, manager of light-metal trading, said in an interview in Tokyo on Aug. 20.

Nickel dropped 1.3 percent to $21,270 a ton and tin rose 0.2 percent to $20,700 a ton. Lead gained 0.2 percent to $2,059 a ton and zinc lost 0.5 percent to $2,048 a ton.

http://www.bloomberg.com/news/2010-08-23/copper-may-slide-in-london-as-rebounding-dollar-erodes-demand-for-metals.html