METALS-Copper slides to 3-week low as Chinese demand disappoints

Tue Feb 19, 2013 12:35pm EST

* Falls limited by better-than-expected German ZEW data
    * Traders say China post-holiday buying may yet emerge
    * Nickel biggest loser, falls 2.6 percent


    By Maytaal Angel and Eric Onstad
    LONDON, Feb 19 (Reuters) - Copper hit a three-week low on Tuesday, depressed
by unease over top consumer China's limp return to the market from a week-long
holiday, although losses were limited by better-than-expected German investor
sentiment data.
    Three-month copper on the London Metal Exchange slipped 0.85 percent
to close at $8,050 a tonne, erasing early gains to hit an intraday low of
$8,043, the weakest since Jan. 29. Nickel, tin and zinc also hit multi-week
lows.
    Copper prices have built a base above $8,000 this year but have failed to
find traction above $8,346 a tonne, a four-month peak hit early this month.
Volumes ticked higher as U.S. traders returned on Tuesday from the Presidents'
Day holiday. 
    Chinese traders reported low overall post-holiday interest in the metal,
weighing on prices, though some purchases had been completed that narrowed
Shanghai's price discount to London cash copper to $80 from about $200
pre-holiday. China consumes about 40 percent of the world's copper.
    "We need to see more substance in terms of underlying demand if the run up
in prices is to be sustained. All eyes were on the return of the Chinese. It's
still early to say, but yes, it's been a no show so far," said Macquarie analyst
Duncan Hobbs.
    "Also there are reports circulating that the Chinese government may start to
tighten (monetary policy)." 
    There was also concern that Beijing and Hong Kong would launch more curbs to
cool rising property prices, which weighed on shares there. 
    Hopes remained among traders that post-holiday buying might yet resume. "A
lot of Chinese guys are still out. We might get a bit more action when Chinese
New Year officially finishes with the Lantern Festival on the 24th," a
Singapore-based trader said.
    Limiting falls, however, was data showing better-than-expected ZEW economic
sentiment in Germany, Europe's biggest economy, which helped push European
shares higher. 
    "Over the balance of this week, we could see the softer tone in metals
remain in place," INTL FCStone said.
    "We have yet to see the Japanese economy recovering in any significant
fashion, and while China's growth is ramping up, it is largely on account of
over reliance on a dominant government sector," it said in a note.
    
    NICKEL BIGGEST LOSER
    In other metals, stainless-steel ingredient nickel was the biggest
loser, falling 2.6 percent to close at $17,390 a tonne, having earlier hit its
lowest since Jan. 28 at $17,350.
    "Nickel has struggled more than most... Interestingly, on-warrant nickel
stocks climbed by 3,528 tonnes this morning," Leon Westgate at Standard Bank
said in a note.  
    Aluminium shed 0.28 percent to finish at $2,111 a tonne and open
interest data showed a drop of 13,117 lots on Monday, indicating
that investors holding long positions were liquidating contracts. 
    Soldering metal tin fell 1.6 percent to end at $23,905 a tonne after
hitting its lowest since Jan. 7 at $23,750.
    Zinc, used in galvanizing, bucked the weaker trend and pared losses
to close unchanged at $2,155 a tonne, having earlier hit its lowest since Feb. 1
at $2,138.
    Battery material lead did not trade at the close, but was bid at
2,375 a tonne, down 0.6 percent from Monday's close. 
    
    
 Metal Prices at 1722 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       364.65       -9.05     -2.42     365.25     -0.16
  LME Alum      2112.00       -5.00     -0.24    2073.00      1.88
  LME Cu        8042.00      -77.00     -0.95    7931.00      1.40
  LME Lead      2378.75      -11.25     -0.47    2330.00      2.09
  LME Nickel   17425.00     -430.00     -2.41   17060.00      2.14
  LME Tin      23903.00     -397.00     -1.63   23400.00      2.15
  LME Zinc      2149.75       -5.25     -0.24    2080.00      3.35
  SHFE Alu     15090.00     -115.00     -0.76   15435.00     -2.24
  SHFE Cu*     58780.00     -390.00     -0.66   57690.00      1.89
  SHFE Zin     15785.00      -35.00     -0.22   15625.00      1.02
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07