METALS-Copper falls on dollar, increasing supply weighs

Fri Mar 8, 2013 12:13pm EST

* China copper imports slump 15.1% in Feb on Lunar New Year effect
    * Dollar rises against euro
    * US employers step up hiring, unemployment at 4-year low

    By Susan Thomas
    LONDON, March 8 (Reuters) - Copper fell on Friday due to a stronger dollar,
bucking a trend in surging global equities markets as commodities investors
worried about increasing supply of the metal and lower demand.
    China's commodity imports were surprisingly weak in February, falling 15.2
percent from a year earlier to 13-month lows, customs data showed on Friday. 
    Its monthly imports of copper fell to their lowest in 20 months as importers
cut term shipments because of the Lunar New Year holiday. 
   China is the world's biggest consumer of most commodities, including base
metals.
    Three-month copper on the London Metal Exchange was untraded at the
close, bid at $7,740 from a close of $7,765 on Thursday, giving back gains after
briefly rising into positive territory following the release of U.S. jobs data.
    U.S. employers stepped up hiring in February, pushing the unemployment rate
to a four-year low, suggesting the economy is gaining traction. 
    World shares, by contrast on Friday, hit their highest level since June 2008
and the dollar touched a 3-1/2 year high against the yen. 
    "What really strikes me most is how the base metals market is behaving
entirely differently from stock markets," BNP Paribas analyst Stephen Briggs
said.
    "Copper's outperformance of the last 10 years has been 150 percent a supply
story and not a demand story. It's still a supply story, but that supply story
is changing in the sense that we are now seeing stronger supply growth, which is
why copper is struggling."
    
    COPPER SURPLUS
    New supply of copper, as mining projects around the globe come on stream, is
expected to bring the market into a surplus of 120,000 tonnes in 2013, compared
with earlier forecasts of a 12,000 tonne deficit this year, and the surplus is
forecast to widen to 295,568 tonnes in 2014, according to a poll by Reuters.
 
    After years of a shortfall, the market is awash with copper.
    Total exchange stocks, comprising metal registered with the LME, COMEX and
the Shanghai Futures Exchange, have mushroomed by 53 percent to 706,000 tonnes
in the space of just three months. They are now at their highest level since May
2010.
    The dollar's rise also damaged copper prices. A stronger dollar makes metals
more expensive for holders of other currencies. 
    In other metals, three-month tin ended at $23,795 from $23,655 at
the close on Thursday, lead closed at $2,212.50 from $2,211 and
aluminium xxx from $1,979. 
    Nickel ended at $16,740 from $16,650 and zinc closed at
$1,975 from $1,990 at Thursday's close.
    "Zinc looks to be the most interesting as it is currently hugging its
200-day moving average at $1,967.50," RBC said in a research note.
    "With relative strength indicators starting to point higher from an oversold
condition, it's probably a sign we may look for some zinc upside."
    
 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       350.00       -0.95     -0.27     365.25     -4.18
  LME Alum      1965.00      -14.00     -0.71    2073.00     -5.21
  LME Cu        7740.50      -24.50     -0.32    7931.00     -2.40
  LME Lead      2209.25       -1.75     -0.08    2330.00     -5.18
  LME Nickel   16700.00       50.00     +0.30   17060.00     -2.11
  LME Tin      23780.00      125.00     +0.53   23400.00      1.62
  LME Zinc      1976.25      -13.75     -0.69    2080.00     -4.99
  SHFE Alu     14900.00       85.00     +0.57   15435.00     -3.47
  SHFE Cu*     56700.00      280.00     +0.50   57690.00     -1.72
  SHFE Zin     15220.00       80.00     +0.53   15625.00     -2.59
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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