METALS-Copper prices steady, falling inventories support

* Copper inventories fall, lowest since Oct 2009
* Technical indicators point to near-overbought conditions
* Euro slips from three-week high against the dollar

By Susan Thomas and Harpreet Bhal
LONDON, Jan 24 (Reuters) - Copper prices steadied on Tuesday, as a tight supply
outlook for the metal used in the power and construction sector offset pressure from a weak
euro on persistent concerns about the euro zone debt crisis.
Three-month copper on the London Metal Exchange ended at $8,360
a tonne, almost flat from a close of $8,365 on Monday.
It earlier hit a session high of $8,402.75, just off the four-month peak of $8,428.50
reached on Friday.
Copper's near 10 percent gain so far this month has pushed its relative strength index
(RSI) to above 63, within sight of the 70 level which indicates an overbought market
susceptible to weakness.
"In the last few weeks the market discounted better economic data out of the U.S. and
strong inflows of liquidity by the European Central Bank. However we have now reached
technical overbought conditions, leaving the market vulnerable to a pullback," said
Gianclaudio Torlizzi, partner at T-Commodity.
"But we are advising our clients to use these pullbacks as an opportunity to get into
the market with a long position," he said, adding that he expected the weakness to be
temporary.

Adding pressure to commodity prices, the euro fell against the dollar on concerns about
the outcome of talks to avert a debt default by Greece. A strong dollar makes commodities
priced in the U.S. unit more expensive for holders of other currencies.
"One of the factors yesterday and today has been the strength of the euro versus the
dollar," BNP Paribas strategist Stephen Briggs said.
"That currency pair has often been a driver. It is one of the drivers this year and has
been a driver particularly in the last day or so."
Copper jumped 1.8 percent on Monday, its sharpest rise since Jan. 12, helped by the
euro's surge to near three-week highs against the dollar and China's record imports of
refined copper in December.
But worries about the euro zone crisis persisted, as euro zone finance ministers
rejected as insufficient an offer made by private creditors to help restructure Greece's
debts, sending negotiators back to the drawing board and raising the threat of a disorderly
default by Greece.

DWINDLING STOCKPILES
Helping to limit losses, Chinese trade data for December showed last week that apart
from lead and tin, imports of all metals rose, with copper inflows reaching a new all-time
high.
Large stock withdrawals in LME-monitored warehouses and hopes that Chinese demand will
stay strong, along with expectations that global production may continue to be hit by
disruptions, have combined to lift copper by around 10 percent so far this year.
"Expectations are that the decreasing stocks are a sign of pent-up demand, which should
continue as the world economy gears up for a post recession run," RBC said in a research
note.
The latest data show that copper stockpiles monitored by the LME stood at
342,250 tonnes, the lowest since October 2009, with cancelled warrants at 22.1 percent of
total stocks.
"The continued downward trend in LME stocks for copper is helpful," Briggs said, but
added: "There must be an increasing concern that this rally is getting a bit overextended,
but there isn't anything to stop it at the moment."
Trading activity was thin in Asia with many markets, including China, shut for the
week-long Lunar New Year holidays.
Aluminium ended at $2,239 a tonne from $2,238 at the close on Monday, while
zinc closed at $2,125 from $2,059 and nickel ended at $20,600 from $20,305.
Tin, closed at $22,190 from $22,150 on Monday, while lead ended at
$2,250 from $2,244.

Metal Prices at 1701 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 379.60 0.05 +0.01 444.70 -14.64
LME Alum 2237.75 -0.25 -0.01 2470.00 -9.40
LME Cu 8358.75 -6.25 -0.07 9600.00 -12.93
LME Lead 2253.00 9.00 +0.40 2550.00 -11.65
LME Nickel 20581.00 276.00 +1.36 24750.00 -16.84
LME Tin 22075.00 -75.00 -0.34 26900.00 -17.94
LME Zinc 2122.00 63.00 +3.06 2454.00 -13.53
SHFE Alu 16395.00 30.00 +0.18 16840.00 -2.64
SHFE Cu* 60720.00 160.00 +0.26 71850.00 -15.49
SHFE Zin 15855.00 195.00 +1.25 19475.00 -18.59
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07