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Copper prices ebb lower in LME officials on eurozone concerns; ECB keeps rates flat

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Copper prices settled close to intraday lows in official trading on the London Metal Exchange on Thursday May 3, responding to weakness in the euro seen as the EU's economic woes come back into focus.

Trading volumes remained thin on Thursday as the market awaits key US employment data due out on Friday and French and Greek elections at the weekend, an analyst said in a note.

"Against that potentially rather volatile backdrop, in addition to the forthcoming long bank-holiday weekend in London, the base metals markets are understandably rather quiet with thin volumes again a feature of the market," the analyst said.

Three-month copper prices settled at $8,255.50/56 per tonne, down from $8,328/29 per tonne a day earlier, as the euro lost further ground against the dollar and moved closer to $1.310, compared with a high of $1.327 earlier in the week.

The eurozone has come back into focus after disappointing purchasing managers' index data from Markit, as well as unemployment figures from Spain showing that nearly one in four people there are out of work.

Despite renewed concerns about growth in the stability in the eurozone, the European Central Bank (ECB) voted to keep interest rates on hold at 1% at a meeting in Barcelona on Thursday.

Copper prices did recover partially following the official session as US unemployment claims offered signs that the jobs market there remains healthy.

US Dept of Labor figures showed 365,000 new unemployment claims were made last week, down from 392,000 the previous week.

Copper stocks in LME-listed locations stood at 235,200 tonnes, down 3,750 tonnes after deliveries out of ports in Korea, the USA and Belgium.

Three-month lead prices settled at $2,108/110 per tonne, down from $1,249/250 per tonne on Wednesday, while cash-to-three-month spreads were trimmed to a $4 contango, from $6 in the previous official session.

There has been speculation that the cancellation of more than 60,000 tonnes of lead in LME warehouses in Europe could cause small backwardations in the nearby curve to flare out, though the impact so far has been muted.

Unlike the copper market, the physical lead market has been well supplied so far this year while demand was soft during the winter, a peak period for the consumption for the battery market, an analyst said.

"If there are more cancellations, maybe we'll see some impact on the backwardation or premiums, but for the moment I'm not sure it will be enough to disrupt things too much," the analyst told Metal Bulletin.

Lead stocks in LME warehouses stood at 360,325 tonnes, down 675 tonnes after a withdrawal from Port Klang, while cancelled warrants totalled 86,375 tonnes.

Three-month aluminium settled at $2,088/88.50 per tonne, down from $2,107.50/08 per tonne a day earlier.

Aluminium stocks totalled 5,004,200 tonnes, down 11,300 tonnes after deliveries out across stores across Asia, Europe and the USA.

Mark Burton
mburton@metalbulletin.comTwitter: @mburtonmb

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