Farallon Resources Ltd. (fka FRLIF)

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Zinc drops, Copper May Decline Before U.S. Economic-Growth Report, Speech by Bernanke

By Chanyaporn Chanjaroen - Aug 27, 2010 5:21 AM PT

Copper may fall in New York and London before the release of figures expected to show the economy in the U.S., the world’s second-biggest consumer of the metal, expanded less than initially estimated.

Growth cooled to a 1.4 percent pace from April through June, rather than the 2.4 percent projected last month, according to the median forecast of 81 economists surveyed by Bloomberg News. Investors also awaited a speech today by Federal Reserve Chairman Ben S. Bernanke on the outlook for the world’s largest economy.

“It’s the overshadowing economic uncertainty that’s the one to watch,” Daniel Major, a strategist at Royal Bank of Scotland Group Plc in London, said by phone. “Today’s focus will be on Bernanke.”

Copper for December delivery slipped 0.35 cent, or 0.1 percent, to $3.322 a pound at 8:14 a.m. on the Comex in New York. The contract is up 0.3 percent this week. Copper for three-month delivery fell 0.1 percent to $7,296 a metric ton on the London Metal Exchange.

Reports this week have indicated a mixed outlook for the U.S. economy. While weekly initial claims for unemployment benefits fell more than expected, orders for durable goods rose less than forecast in July and sales of existing and new homes were weaker than estimated.

Stimulus Measures

The Fed said Aug. 10 it would buy Treasuries to help prevent interest rates from rising. Any signs from Bernanke of further measures to stimulate the U.S. economy would be positive for industrial metals, said Dan Brebner, who heads metals research at Deutsche Bank AG in London.

“The likelihood is that the market will be disappointed, as the Fed probably hasn’t decided on more measures themselves,” Brebner said today by phone. A “lack of clarity would pressure prices,” he said.

Bernanke’s speech to central bankers from around the world, gathered at a symposium in Jackson Hole, Wyoming, will start at 3 p.m. London time. It will be followed by a speech from European Central Bank President Jean-Claude Trichet.

LME copper stockpiles dropped 0.3 percent to 400,100 tons, taking this year’s decline to 20 percent. Canceled warrants, or orders to draw metal from LME warehouses, jumped 8.2 percent to 30,275 tons.

World Consumption

Including metal tracked by exchanges in Shanghai and New York, copper inventories totaled 600,979 tons, or 12 days of global consumption based on the RBS estimate for demand this year of 18.2 million tons. That’s down from almost 14 days at the start of 2010. China is the biggest copper consumer.

Tin for three-month delivery on the LME climbed as much as 1.9 percent to $21,750 a ton, the highest intraday price since August 2008. Prices are up more than 26 percent this year, the most among the six main metals traded on the LME. The metal was last up 0.4 percent at $21,425.

Production will be 13,000 tons lower than demand in 2011 following an estimated 6,000-ton shortage this year, according to Standard Bank Plc.

“I’m bullish on tin, as fundamentals are quite positive,” Leon Westgate, a metals analyst at the bank in London, said today by phone. “You’ve got poor supply and strengthening demand.”

Aluminum lost 0.5 percent to $2,012 a ton and zinc dropped 0.2 percent to $2,046 a ton. Lead fell 0.1 percent to $2,024 a ton and nickel rose 0.7 percent to $20,600 a ton.

http://www.bloomberg.com/news/2010-08-27/copper-may-decline-before-u-s-economic-growth-report-speech-by-bernanke.html