METALS-Copper falls below $8,000 on China slowdown fear

Fri Apr 13, 2012 2:49pm EDT

* Copper slammed by Chinese slowdown fears
    * Copper off 4 percent on the week
    * JPMorgan files copper-backed ETF
    * Coming up: U.S. March retail sales data on Monday

    By Chris Kelly and Silvia Antonioli	
    NEW YORK/LONDON, April 13 (Reuters) - Copper fell below $8,000 a tonne on
Friday for the first time in three months, as below-forecast growth in China
deepened concerns over the metal-consuming giant's appetite for raw materials.	
    Copper finished the week down 4 percent after China, which accounts for 40
percent of the world's copper demand, reported first-quarter growth of 8.1
percent, the weakest in almost three years and below market expectations for
growth of 8.3 percent. 	
    China's disappointing growth figures overshadowed news that investment bank
JPMorgan has filed to list a copper-backed exchange-traded fund (ETF)
with NYSE Euronext.	
    Investors are still questioning China's ability to steer its economy into a
"soft landing" and analysts have begun to question whether the copper market
will remain as tight as it has been, with Shanghai copper inventories rising
this year.	
    "We're still expecting a copper deficit for this year, but the probability
of one diminishes every time we get negative data from China," said Bart Melek,
head commodity strategist with TD Bank Financial Group.	
    London Metal Exchange (LME) three-month copper fell to a session
trough of $7,964.25 a tonne, its lowest level since Jan. 16, before ending the
day down $230 at $7,990.	
    In New York, the May COMEX contract sank 9.35 cents or 2.5 percent to
settle at $3.6270 per lb, after dealing between $3.6055 and $3.7225.	
    COMEX copper volumes kept sprinting higher, with nearly 100,000 lots traded
late in New York -- more than two-thirds above the 30-day norm, according to
preliminary Thomson Reuters data.	
    JPMorgan lodged a filing to list a copper-backed exchange-traded fund
(ETF)with NYSE Euronext in the first sign for nearly a year that a new product
may list. 	
    The news of the filing took a backseat to the China growth numbers.	
    "China's Q1 GDP was lower than expected as well as Q1 home sales, adding to
recently negative sentiment and renewed growth fears," VTB Capital analyst
Andrey Kryuchenkov said.	
    	
    	
    	
    "Anyhow, growth of over 8 percent is not that bad, just lower than expected.
This will push the government to increase public spending. The focus is back on
China at the moment, but really people should worry more about Europe."	
    The cost of insuring Spanish debt against default hit 500 basis points for
the first time as fears about the high exposure of the country's banking sector
to sovereign debt drove the price of credit default swaps higher.   	
    Data on Friday showed Spanish banks borrowed a record 316.3 billion euros
from the European Central Bank in March and markets fear much of the funds have
been placed in domestic sovereign debt. 	
    Adding pressure to base metals prices was a drop in the euro against the
dollar after data showed U.S. consumer sentiment slipped modestly in early
April. 	
    A stronger U.S. currency makes dollar-priced commodities such as metals
costlier for holders of other currencies.	
            	
    SLUGGISH DEMAND	
    Uncertainty about the global economy and sporadic demand from China are
expected to keep copper prices soft this year, though analysts are slightly more
optimistic than they were earlier this year, a Reuters poll showed.	
    The average forecast of 37 analysts in the survey, carried out in recent
weeks, called for cash prices for copper to average $8,445 a tonne in 2012,
rising to $8,818 in 2013. 	
    "Copper demand in China has picked up slightly since the beginning of April
as consumers came back to restock a little. But overall, demand remains weak and
stocks are still too high," a Shanghai-based trader said.  	
    Copper stocks in warehouses monitored by the Shanghai Futures Exchange have
quadrupled since the beginning of the year. 
    China's demand for refined copper may not revive until September as current
heavy stockpiles are depleted and Beijing takes steps to boost the cooling
economy, analysts and sources at copper products manufacturing plants said on
Thursday. 	
    Tin shed $450 to end at $22,205 a tonne.	
    Indonesia's finance minister said the country will issue a mining export tax
regulation by June, showing the government is pushing ahead with a policy that
is worrying resource firms. 	
    	
 Metal Prices at 1754 GMT
                                                                  
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       362.25       -9.80     -2.63     343.60      5.43
  LME Alum      2070.00      -34.00     -1.62    2020.00      2.48
  LME Cu        7990.00     -230.00     -2.80    7600.00      5.13
  LME Lead      2065.00      -33.00     -1.57    2035.00      1.47
  LME Nickel   18310.00     -490.00     -2.61   18710.00     -2.14
  LME Tin      22205.00     -450.00     -1.99   19200.00     15.65
  LME Zinc      1983.00      -57.00     -2.79    1845.00      7.48
  SHFE Alu     16090.00      -15.00     -0.09   15845.00      1.55
  SHFE Cu*     58010.00     -220.00     -0.38   55360.00      4.79
  SHFE Zin     15475.00       10.00     +0.06   14795.00      4.60
 ** 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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