METALS-Copper falls to 8-month low on demand concerns

Wed Apr 3, 2013 12:28pm EDT

* Aluminium reaches 7-month low, nickel 4-month low
    * India's biggest copper plant closes for at least a week
    * Copper inventories rise to highest since October 2003

    By Silvia Antonioli
    LONDON, April 3 (Reuters) - Copper fell to an eight-month low on Wednesday
as concerns about economic growth cast doubt on the global demand outlook for
industrial metals and pushed speculators to open more short positions ahead of a
two-day holiday in China.
    Benchmark copper on the London Metal Exchange closed at $7,386.5 a tonne,
down from $7,465 at the close on Tuesday. Earlier in the session it hit $7,390,
its lowest since early August.
    LME aluminium fell to a seven-month low, lead to a
five-month low and nickel to its lowest in four months.
    "Market sentiment has completely gone. It is with equities now, not with
metals, and fundamentals are not improving. Premiums are still low, inventories
are rising and the copper forward curve in London remains firmly in a contango,"
said Andrey Kryuchenkov, an analyst at VTB Capital.
    "We are seeing more stocks going in than out at the moment ... On the macro
front there are concerns about growth."
    Disappointment came from a U.S. jobs report that showed fewer-than-expected
people hired in the private sector in March, while a services sector index also
came in below expectations.  
    Downbeat manufacturing data released earlier this week from the United
States also raised concerns about the pace of recovery in the world's largest
economy. 
    At the same time, swelling stocks of metals in LME-registered warehouses
signal some weakness on the demand side.
    Traders said there was fund-based, momentum-driven selling when European
markets opened, partly because metals had fallen below key technical support
levels.
    "Europe opened and it was sell, sell, sell," a Singapore-based trader said.
    Traders are now awaiting reports on the U.S. labour market, with the
headline payrolls report due on Friday. A better-than-expected figure could
signal an early end to bond buying, eroding liquidity and speculative demand for
metals.
    Chinese markets are shut for a two-day break from Thursday.
    
    HIGH INVENTORIES
    Raising worries about demand, inventories of copper in LME-approved sheds rose by 1,200 tonnes to 572,325 tonnes, their highest since October
2003, data released on Wednesday showed.
    Also LME stocks of zinc, nickel and aluminium were at or near record highs. 
    On the supply side, Sterlite Industries Ltd has halted deliveries
of copper from India's largest smelter after it shut down last week due to
complaints over emissions. 
    This, however, represented a small loss when compared with increases in top
producer Chile, where according to figures released last week output grew by 2.8
percent in February from a year earlier to 420,207 tonnes on improved ore grades
and higher production. 
    In other metals, zinc, used to galvanize steel, closed at $1,857 per
tonne from $1,854 at Tuesday's close, and lead closed flat at $2,050.
Earlier it hit its lowest since late October at $2,034. 
    Aluminium, untraded at the close, was last bid at $1,871.5 from $1,884. It
earlier hit its lowest since late August at $1,869.
    Tin closed at $22,700 from $23,000 and nickel at $16,105 from
$16,380.
    
 Metal Prices at 1712 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       334.00       -3.85     -1.14     365.25     -8.56
  LME Alum      1871.00      -13.00     -0.69    2073.00     -9.74
  LME Cu        7399.50      -65.50     -0.88    7931.00     -6.70
  LME Lead      2049.00       -1.00     -0.05    2330.00    -12.06
  LME Nickel   16095.00     -285.00     -1.74   17060.00     -5.66
  LME Tin      22661.00     -339.00     -1.47   23400.00     -3.16
  LME Zinc      1861.75        7.75     +0.42    2080.00    -10.49
  SHFE Alu     14565.00       -5.00     -0.03   15435.00     -5.64
  SHFE Cu*     54070.00     -270.00     -0.50   57690.00     -6.27
  SHFE Zin     14520.00     -145.00     -0.99   15625.00     -7.07
 ** 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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