METALS-Copper eases from record; supply worries support

* Copper surges to all-time peak at $9,044/T

* ETF Securities to offer base metals ETCs from Dec. 10

* Coming up: U.S. weekly jobless claims on Thursday
(Recasts with New York closing copper price, adds New York dateline/byline and
analyst comments)

By Chris Kelly and Melanie Burton

NEW YORK/LONDON, Dec 7 (BestGrowthStock) – Copper slipped from a record above
$9,000 a tonne on Tuesday, as euphoria over a deal to extend U.S. tax breaks
faded, prompting investors to cash in on a six-day rally that boosted values by
nearly 11 percent.

Copper led a broad-based charge in the base metals complex, after news that
U.S. President Barack Obama reached an agreement to extend the Bush-era tax
cuts for two years.

The deal was seen as a stimulus for the economy, boosting appetite for
global stocks, commodities and riskier assets. [ID:nN06211347]

But copper’s rally to all-time peaks turned out to be short-lived as the
euro relinquished gains against the dollar, making metals priced in the U.S.
currency less attractive. [USD/]

“A lot of it is buy the rumor, sell the news of the tax bill going
forward,” said Bill O’Neill, partner at LOGIC Advisors in Upper Saddle River,
New Jersey.

Still, copper kept some of its gains even as other commodity markets such
as gold and crude oil turned lower, as supply-side concerns mounted.

In a move seen supporting prices, ETF Securities said it would launch the
first exchange-traded commodity products backed by industrial metals on Dec.
10. [ID:nLDE6B61P9]

A copper ETF could slice 185,000 tonnes away from a market already seen in
a 400,000-tonne deficit next year.

London Metal Exchange data showing a single entity held 50 to 80 percent of
copper cash warrants (LME/WC: ) added to the tightness, helping to keep a premium
for nearby material firmly above the benchmark contract since November.
(CMCU0-3: )

LME copper for three-month delivery (CMCU3: ) was untraded at the close but
bid at $8,880 a tonne, paring gains after hitting a fresh all-time peak of

COMEX copper for March delivery (HGH1: ) gained 4.15 cents to end at $4.0495
per lb, away from a session high at $4.1315, a record for the fourth position
futures contract.

“A weaker dollar and risk sentiment is what has been driving (prices)
higher … There is an increasing worry about shortages on the physical side
and that has also contributed to the move,” Danske Bank analyst Christin Tuxen

“The idea of supply constraints is especially important for copper and you
are also seeing rising demand from emerging markets, so you are having this
perfect storm that is building.”

ETF Securities’ announcement added to copper’s bullish outlook.

“Copper is in deficit next year, we can’t say for certain (what the impact
will be) because you need to see what the interest from the investment
community will be,” VTB Capital analyst Andrey Kryuchenkov said.

Apart from the potential launch of ETPs, prospects are for higher copper
prices when consumers need to restock early next year, analysts said.

“The deficit (is seen) increasing by varying estimates of between 200,000
and 400,000 tons during 2011 and 2012 at a time when consumers are still
operating low inventory levels,” Sucden Financial said in a research note.

The latest LME data showed copper stocks fell by 1,000 tonnes to 351,375
tonnes — down 37 percent since February, when stockpiles at LME warehouses
stood at 555,075, the highest since October 2003.

“The ever-depleting stocks are signaling increasing levels of consumption,”
Sucden added.


Copper’s advance had also fueled momentum across other metals, with zinc
(CMZN3: ) rallying as much as 5 percent before paring gains later in the session.
It closed up $85 at $2,305.

“Zinc has lagged behind the other metals like copper and at one point it
was $200 below lead. Volumes were good overnight in Asia and we have seen buy
stops triggered this morning. It looks like it could have further to run,” an
LME floor trader said.

Lead (CMPB3: ) rose $45 to $2,398 a tonne and nickel (CMNI3: ) jumped $495 to
$24,095. Aluminum (CMAL3: ) closed flat at $2,305 a tonne, while tin (CMSN3: ) shed
$450 to $25,100.
Metal Prices at 1930 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2009 Ytd Pct

COMEX Cu 405.55 4.75 +1.19 334.65 21.19
LME Alum 2304.00 -51.00 -2.17 2230.00 3.32
LME Cu 8880.00 110.00 +1.25 7375.00 20.41
LME Lead 2400.00 47.00 +2.00 2432.00 -1.32
LME Nickel 24090.00 490.00 +2.08 18525.00 30.04
LME Tin 25200.00 -350.00 -1.37 16950.00 48.67
LME Zinc 2304.50 84.50 +3.81 2560.00 -9.98
SHFE Alu 16330.00 -5.00 -0.03 17160.00 -4.84
SHFE Cu* 66480.00 1050.00 +1.60 59900.00 10.98
SHFE Zin 18335.00 80.00 +0.44 21195.00 -13.49
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
(Additional reporting by Marie-Louise Gumuchian in London; editing by Dale

METALS-Copper eases from record; supply worries support