METALS-Copper falls to near 3-week low on growth concerns

Mon Feb 18, 2013 12:14pm EST

* Chinese return to market after week-long break
    * U.S. markets shut for President's day holiday
    * Worries about oversupply, economic growth weigh

    By Harpreet Bhal
    LONDON, Feb 18 (Reuters) - Copper prices dipped to a near three-week low on
Monday as signs of weak global growth dampened the demand outlook for industrial
metals, with the focus on buying interest from top consumer China where
investors are returning from a week-long holiday.
    Benchmark three-month copper on the London Metal Exchange (LME) 
closed at $8,119, from a close of $8,207 on Friday. It earlier fell to an
intraday low at $8,107, its lowest level since Jan. 30.
    Copper hit a four-month peak of $8,346 in early February but has since
struggled to gain traction. Traders hope that China's return to the market this
week could help set a floor under prices.
    But worries about the outlook for the global economy, following last week's
weak growth data in the euro zone and soft U.S. manufacturing figures, and its
impact on demand for industrial metals have put a cap on further gains.
    "Sentiment is taking a bit of a knock from the investment flows that we have
seen from Asia. The impression that we get is that investors in Asia are a bit
more negative about growth prospects for the U.S. and Europe and as a result are
concerned about export demand," said Gayle Berry, analyst at Barclays.
    "And it is going to take a little while before we see whether or not some of
the better economic data coming out of China translates into better metal
demand." 
    Gains in the dollar versus the euro also put pressure on metals prices. A
strong dollar makes commodities priced in the U.S. unit more expensive for
holders of other currencies. 
    Over the weekend, the Group of 20 nations declared there would be no
currency war and deferred plans to set new debt-cutting targets, underlining
broad concern about the fragile state of the world economy. 
    
          
        
    STILL STRONG 
    All eyes are on any signs of a pick-up in demand from China, which accounts
for 40 percent of global refined copper demand.
    "Base metals fell in Asian trading as the Chinese came back to the market
with a bearish bent. Worries about oversupply seem to be the focus of the day as
prices across the board look weak," RBC said in a research note. 
    Traders painted a mixed demand picture for copper in China.
    They reported purchases of the metal from bonded Shanghai inventories which
are teetering near record highs above 1 million tonnes but also selling of
copper futures and fresh shorts.
    "Many Chinese were long or reluctant to short in pre-Lunar New Year trade as
we've seen westerners pulling the market higher to squeeze Chinese shorts in
last few years," a Shanghai-based trader said. "Now, bears are more confident to
short on the almost unchanged price during the holiday," he added.
    Three-month tin closed at $24,300 a tonne, its lowest in three
weeks, from Friday's close of $24,800.
    Nickel closed at $17,855, from $18,375. It earlier fell to a near
three-week low at $17,816. 
    Three-month zinc closed at $2,155 a tonne from Friday's close of
$2,175. It earlier fell to its lowest level in more than a week at $2,152.
    Lead closed at $2,390 from $2,433, and aluminium at $2,117
from a last bid of $2,167.
    
 Metal Prices at 1702 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2012   Ytd Pct
                                                              move
  COMEX Cu       368.35       -5.35     -1.43     365.25      0.85
  LME Alum      2120.00      -38.00     -1.76    2073.00      2.27
  LME Cu        8118.75      -88.25     -1.08    7931.00      2.37
  LME Lead      2394.25      -38.75     -1.59    2330.00      2.76
  LME Nickel   17872.00     -503.00     -2.74   17060.00      4.76
  LME Tin      24351.00     -449.00     -1.81   23400.00      4.06
  LME Zinc      2155.00      -20.00     -0.92    2080.00      3.61
  SHFE Alu     15140.00      -70.00     -0.46   15435.00     -1.91
  SHFE Cu*     58900.00     -830.00     -1.39   57690.00      2.10
  SHFE Zin     15750.00     -175.00     -1.10   15625.00      0.80
 ** 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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