CORRECTED-METALS-Chinese trade data drains copper market sentiment

Thu Oct 13, 2011 6:51am EDT

* Imports and inventories help bolster copper
    * Energy intensive aluminium output may be limited
    * Coming up: U.S. trade and weekly jobs data at 1230 GMT

    By Pratima Desai	
    LONDON, Oct 13 (Reuters) - Copper prices sagged on Thursday
after soft Chinese trade data reinforced a gloomy outlook for
global economic growth, but signs of stronger industrial metals
demand from the country helped limit losses.	
    Benchmark copper on the London Metal Exchange was
trading at $7,422 a tonne at 0916 GMT from $7,529 at the close
on Wednesday when the metal used in power and construction hit a
two-week high of $7,544.75 a tonne.	
    China's trade surplus narrowed in September, as both imports
and exports were lower than expected, reflecting global economic
weakness and domestic cooling that will deepen policy quandaries
facing Beijing. 	
    "The fact that the trade surplus is down for the second
month running is raising questions about whether China can
decouple from the G3 (United States, Japan and Germany)," said
Robin Bhar, analyst at Credit Agricole. "That is putting
pressure on commodities and copper in particular."	
    China is the world's largest copper consumer accounting for
nearly 40 percent of global demand estimated this year at around
20 million tonnes. 	
    Traders said industrial metals markets will be closely
watching Chinese inflation data due on Friday for clues to the
future direction of monetary policy, which has been on a
tightening trajectory since last year. 	
    That has been a major reason behind the 30 percent fall in
copper prices since a record high of $10,190 a tonne on Feb 15.	
    Also on the agenda for next week is industrial production
data from China, a key indicator of metals demand.	
    	
    CAUTION WARRANTED	
    On the plus side however, traders cite Chinese imports of
copper which rose 11.8 percent in September to a 16-month high
and expectations that the trend could continue for the rest of
this year if prices stay around current levels. 	
    "The euro zone issue is still there, there is a lot of
uncertainty, but it looks better than it did and the stocks data
is also more positive," a copper trader said.	
    Stocks of copper in LME approved warehouses have fallen to
453,100 tonnes, down nearly five percent since the start of
October. 
    Even more positive is the amount of copper -- 32,725 tonnes
-- waiting to leave warehouses in South Korea for destinations
in China, traders said. 
    Financial and commodity markets are watching Italy, set to
test fragile investor confidence in the euro zone's ability to
heal its debt problems, with a sale of bonds. 	
    "Some caution is warranted in the near-term as there is
still room for disappointment in the euro zone with regards to
its debt problems," Credit Suisse said in a note.	
    "Energy intensive Chinese aluminum output growth may remain
constrained into the fourth quarter as power supplies have
remained tight, according to grid operators."	
    China is the world's largest producer and consumer of
aluminium used in power, transport and packaging.	
    Three-month aluminium was at $2,229 a tonne from
$2,248 on Wednesday, zinc at $1,934 from $1,945 and lead
 at $2,032 from $2,070.	
    Tin was trading at $22,590 a tonne from $23,000 and
nickel at $18,945 from $19,080.	
    	
 Metal Prices at 0915 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                              move
  COMEX Cu       334.10       -4.95     -1.46     444.70    -24.87
  LME Alum      2227.25      -20.75     -0.92    2470.00     -9.83
  LME Cu        7441.75      -87.25     -1.16    9600.00    -22.48
  LME Lead      2034.00      -36.00     -1.74    2550.00    -20.24
  LME Nickel   18950.00     -130.00     -0.68   24750.00    -23.43
  LME Tin      22400.00     -600.00     -2.61   26900.00    -16.73
  LME Zinc      1935.50       -9.50     -0.49    2454.00    -21.13
  SHFE Alu     16660.00      -85.00     -0.51   16840.00     -1.07
  SHFE Cu*     54880.00      -50.00     -0.09   71850.00    -23.62
  SHFE Zin     15160.00      -45.00     -0.30   19475.00    -22.16
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
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