METALS-Copper sags to 3-month low, China worries weigh

Mon Apr 16, 2012 2:14am EDT

Related Topics

* LME copper falls further below $8,000, Shanghai slides
    * Stronger dollar also weighing, euro at one-month low
    * Coming Up: U.S. NAHB housing market index, 1400 GMT

 (Updates prices, adds quotes and details)	
    By Carrie Ho	
    SHANGHAI, April 16 (Reuters) - Copper fell further below
$8,000 a tonne to hit fresh three-month lows on Monday,
pressured by growing concern about slower demand from top
consumer China, with Shanghai prices sliding more than 2
percent.	
    A stronger dollar also weighed on the metal, as rising
Spanish bond yields which revived worries over the debt-plagued
euro zone, dragged down the euro to one-month lows.	
    Three-month copper on the London Metal Exchange fell
as low as $7,885.25 a tonne, a level not seen since Jan. 13. By
0547 GMT, it was down 1.2 percent at $7,894.25, adding to a 2.8
percent slide on Friday, when the Chinese data was released.	
    The data, which showed the Chinese economy growing an annual
8.1 percent in the first quarter, its weakest pace in nearly
three years, fuelled a rash of selling, said Jonathan Barratt,
chief executive of BarrattBulletin, a Sydney-based commodity
research firm.    	
    "We have broken through some pretty heavy support levels in
copper. When this happens, you'll see some funds selling,"
Barratt said.	
    Copper was up as much as 15 percent this year when it hit a
high of $8,765 in February as investors banked on firm Chinese
demand and tight global supplies.	
    That year-to-date gain has thinned to less than 4 percent on
Monday.    	
    LME's losses spread to Shanghai. The most-active July copper
contract on the Shanghai Futures Exchange fell 2.3
percent to 56,700 yuan ($9,000) a tonne, not far off the session
trough of 56,650 yuan, its weakest since Jan. 11.	
    So concerned were market players about the shaky global
economic outlook that they shrugged off China's weekend move to
let the yuan trade more freely against the dollar, which
economists say suggests Beijing is optimistic the economy is
strong enough to withstand currency movements. 	
    "Investors are not outright pessimistic but just wary. This
will cause copper prices to fluctuate in the near term, while
they try to eke out new technical ranges," said Orient Futures
derivatives director Andy Du.	
    Soaring bond yields in Spain added to the gloom. Spain's
banks increased their reliance on cheap loans from the European
Central Bank in March, borrowing almost double what they did in
February. 	
    The dollar rose to its highest in a month versus the euro as
Spain's soaring bond yields rekindled worries about the fragile
state of the euro zone's economy, sending Asian shares lower
too.   	
    Spain's government bond yields rose and the cost of insuring
its debt hit an all-time high on Friday, as record borrowing by
its banks from the European Central Bank highlighted fears about
the country's finances before it tests market appetite for its
debt on Thursday.	
    	
  Base metals prices at 0547 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7894.25    -95.75     -1.20      3.87
  SHFE CU FUT JUL2    56700     -1330     -2.29      2.42
  HG COPPER MAY2     357.15     -5.55     -1.53      3.94
  LME Alum          2070.00    -10.00     -0.48      2.48
  SHFE AL FUT JUL2    16065       -95     -0.59      1.39
  LME Zinc          1985.00      1.00     +0.05      7.59
  SHFE ZN FUT JUN2    15380      -185     -1.19      3.95
  LME Nickel       18033.00   -272.00     -1.49     -3.62
  LME Lead          2041.00    -24.00     -1.16      0.29
  SHFE PB FUT      15575.00   -145.00     -0.92      1.90
  LME Tin          22031.00   -174.00     -0.78     14.74
  LME/Shanghai arb^    1544
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
    
($1 = 6.3030 Chinese yuan)	
	
 (Editing by Manolo Serapio Jr.)
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