METALS-Copper falls as mixed U.S. data dampens demand prospects

Fri Mar 15, 2013 1:38pm EDT

* Shanghai warehouse copper stocks up 2.9 pct
    * U.S. industrial output rises, consumer sentiment tumbles
    * China buys zinc, aluminium to support domestic prices

    By Silvia Antonioli and Harpreet Bhal
    NEW YORK/LONDON, March 15 (Reuters) - Copper fell on Friday
with appetite for risk waning after the release of a set of
mixed economic data from the United States, while rising stocks
of the metal in China reinforced uncertainty about future
demand.
    Three-month copper on the London Metal Exchange, was
untraded at the close, but was last bid at $7,751, down 0.6
percent from Thursday's close and on track for a weekly increase
of only 0.2 percent.
    The metal used in power and construction is now trading
about 2 percent lower in the year to date after it shed more
than 4 percent in February.
    Data showed that U.S. industrial production rose more than
expected in February on a rebound in manufacturing, signalling
strength in the world's largest economy. 
    Optimism however was dampened by other U.S. reports showing
a tumble in consumer sentiment in early March, the biggest
increase in consumer prices in nearly four years last month and
slowing manufacturing growth in the New York State. 
    "The numbers were so-and-so. We are seeing inconsistent
reading: one step forward, one step back. It's not firing on all
cylinders," said Edward Meir, analyst at INTL FCStone.
    He said that lack of growth in Europe was also weighing on
the outlook for base metals.
    "And if anything, fundamentals are getting worse: copper
stocks are rising, all the estimates now firmly show a surplus
for this year, all these mines are reporting year-on-year output
increases, which was unheard of a few years ago."
    The high level of copper stocks was weighing on prices, with
inventories in warehouses monitored by the Shanghai Futures
Exchange rising 2.9 percent from last Friday, according from
data from the exchange. 
    ShFE and LME copper stocks have climbed more than 200,000
tonnes, or more than a quarter of combined total stocks so far
this year.  
    
          
    
    CHINESE BUYING 
    China's state stockpiler bought 300,000 tonnes of aluminium
and 45,000 tonnes of zinc in two closed-door tenders on Friday,
smelter sources said, although the move is not expected to lift
domestic prices of the metals dramatically. 
    China is the world's top consumer and producer of aluminium,
whose domestic prices hover at nearly three-year lows, and zinc,
whose prices at home stand near their lowest in four months. The
sources said, however, that the purchase is not expected to turn
around China's oversupplied aluminium market.
    Underlining the excess supply, aluminium stocks monitored by
the Shanghai Futures Exchange rose 2.1 percent from
a week ago, hitting a record 502,622 tonnes, data from the
exchange showed. 
    "The Chinese purchases pose risks, as they keep producers
artificially alive and the already high supply surpluses remain
in place or are actually increased. In the medium term, this
could prevent any significant rise in prices," Commerzbank said
in a note.
    Benchmark aluminium closed at $1,965 a tonne, down
from a last bid of $1,979 on Thursday.
    Stainless steel material nickel fell to $16,900 from
a $17,225 Thursday close while zinc ended at $1,954,
down from $1,976.
    Tin finished at $23,850 from a $23,925 close on
Thursday and lead ended at $2,222, from $2,248.50.