METALS-Copper dips on weakening global demand outlook

* Euro zone recession fears, China demand weighs on copper
* Freeport Indonesia says "work interruptions" at mine
* Annual zinc treatment charge (TC) deal done at $191/T
* China spot zinc TCs to rise above $100/T this year
* Coming up: Shanghai metals inventory data Friday

By Chris Kelly and Silvia Antonioli
NEW YORK/London, Feb 23 (Reuters) - Copper fell for a second straight
day on Thursday, pressured by tepid Chinese buying at the start of the year and
expectations of recession in the euro zone and its negative demand implications
for industrial metals.
Losses bucked a generally positive tone in other risk-asset markets like
equities and crude oil, as well as stronger move in the euro versus the dollar,
as copper investors returned their focus to a dimmer demand and brushed aside
renewed supply-side troubles at a major copper mine in Indonesia.
"The macro demand picture is trumping all today," said Michael Gross,
futures analyst with Optionsellers.com in Tampa, Florida.
London Metal Exchange (LME) three-month copper shed $45 to end at
$8,390 a tonne.
In New York, the March COMEX contract fell by 2.75 cents to settle at
$3.8060 per lb, after dealing between $3.7735 and $3.8395.
Copper slumped after European Commission interim data showed euro area GDP
was expected to shrink 0.3 percent this year compared with a previous forecast
for 0.5 percent growth, with the region likely to head into its second recession
in just three years.
"The outlook for the euro zone economy is weighing on sentiment," said Peter
Fertig, a consultant at Quantitative Commodity Research.
"If the euro zone is in a recession and is importing less, this has
implications on Chinese exports and Chinese growth, which will impact base
metals."
Those growth implications in China, which consumes 40 percent of the world's
copper, were realized in a preliminary purchasing managers' survey in China on
Wednesday, showing export orders falling the most in eight months.

Copper failed to garner much support from news of renewed violence and work
stoppage at Freeport-McMoRan Copper & Gold Inc's vast Grasberg mine in
Indonesia due to an unresolved issue with the company.
"The longer the issue goes on, the bigger factor it will become,"
Optionsellers.com's Gross said.
"The market is still digesting the European news, focusing on the macro. The
strike will be something to keep an eye on in the coming days and weeks."

STRONG POTENTIAL FOR ALUMINIUM
Expectations of a global copper production deficit are supporting prices,
but it is unclear when demand will rise, said Germany's Aurubis,
Europe's biggest copper producer.
Compared with copper, there may be more upside potential for aluminium
which has gained more than $100 in less than a week. It was untraded at
the close but bid at $2,273, from a close of $2,280, not far from its 200-day
moving average at $2,311.66.
"If it broke through its 200-moving day average, it would potentially be
quite a strong signal," said ANZ senior analyst Nick Trevethan.
"Near-term prospects look quite decent for aluminium. There's reasonable
demand from the aerospace sector, and from the auto sector in North America at
least and higher energy prices are also supporting the market."
Aluminium stockpiles at LME warehouses staying at record highs above 5
million tonnes as well as excess smelting capacity had pressured prices late in
2011 even as bulk of the LME stocks are believed to be tied to financing deals.
Zinc ended down $19 at $2,048 a tonne, a day after Teck Resources
Ltd and Korea Zinc came to terms on annual zinc processing
fees of $191 per tonne.
This fee stands well above spot treatment and refining charges (TC/RCs) in
China, which may rise above $100 this year as loss-making smelters cut output, a
senior analyst at state-backed firm Antaike said.

Metal Prices at 1923 GMT

Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 380.60 -2.75 -0.72 343.60 10.77
LME Alum 2273.00 -7.00 -0.31 2020.00 12.52
LME Cu 8390.00 -45.00 -0.53 7600.00 10.39
LME Lead 2164.50 16.00 +0.74 2035.00 6.36
LME Nickel 19975.00 -125.00 -0.62 18710.00 6.76
LME Tin 24190.00 140.00 +0.58 19200.00 25.99
LME Zinc 2048.00 -19.00 -0.92 1845.00 11.00
SHFE Alu 16225.00 -25.00 -0.15 15845.00 2.40
SHFE Cu* 60420.00 -70.00 -0.12 55360.00 9.14
SHFE Zin 15865.00 40.00 +0.25 14795.00 7.23
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07