METALS-Copper falls on economic growth concerns, rising supply

Fri Apr 19, 2013 12:46pm EDT

* Copper off lows, seen vulnerable to further falls
    * Anglo American copper production rises 1 pct in first quarter
    * Coming Up: U.S. CFTC commitment of traders data; 1930 GMT

    By Susan Thomas
    LONDON, April 19 (Reuters) - Copper fell on Friday and showed its biggest
weekly decline since 2011 on concerns about global growth, after surprisingly
weak economic data, as well as due to rising inventories and mine supply.
    London Metal Exchange copper was above 1-1/2 year lows hit on Thursday, but
was still seen vulnerable to further falls despite other commodities including
gold and oil, and world equities, edging up after a big sell-off this week.
    The dollar fell against the euro but even this weakness in the U.S.
currency, which makes dollar-priced metals cheaper for European and other
non-U.S. investors, failed to lift copper. 
    "People are increasingly realising that copper supply has heavily surprised
on the upside," Danske Bank analyst Christin Tuxen said. "That is increasingly
weighing on copper, alongside the heavy build-up in exchange inventories."
    Benchmark three-month copper ended down more than 1 percent at
$6,990 a tonne from $7,088 at the close on Thursday, marking its biggest weekly
loss since late 2011. Copper, used in power and construction, hit a 1-1/2 year
low of $6,800 on Thursday.
    Surprisingly weak Chinese growth data, poor U.S. jobless claims and factory
data, plus a lowered global growth forecast from the International Monetary Fund
have hit commodities this week and brought the recent rally in equities to a
halt.
    Also weighing on copper, new mine supply is seen bringing the market into a
surplus of 120,000 tonnes in 2013, compared with earlier forecasts of a 12,000
tonne deficit, with the surplus forecast to widen to 295,568 tonnes in 2014, a
Reuters survey of analysts showed in January. 
    Copper production at Anglo American rose 1 percent to 170,400 tonnes
in the first three months of the year, beating expectations for a drop in the
metal given operational problems, as the ramp-up of its Los Bronces mine offset
lower production at Collahuasi in Chile, the company said on Friday.
 
    Meanwhile, inventories of copper in LME warehouses are hovering around a
10-year high, although Shanghai Futures Exchange copper inventories have fallen
to their lowest since early March. 
    "The Chinese really don't like copper at the moment (but) the physical
market is showing signs of life, with physical premia picking up," Standard Bank
said in a note.
    "The SHFE copper market is quite short, with the potential for a
short-covering rally on both the SHFE and LME should the current doom and gloom
lift."
    Reflecting souring sentiment towards commodities, investors in U.S.-based
funds pulled a record $2.7 billion out of commodities and precious metals funds
in the latest week, data from Thomson Reuters Lipper service showed on Thursday.
 
    The average actively managed fund in the Lipper Global Commodity sector fell
1.83 percent in the first quarter. 
    In other metals, three-month aluminium ended down at $1,887 a tonne
from $1,913 at the close on Thursday, lead closed at $2,020 a tonne from
$2,014, nickel at $15,165 a tonne from $15,530, and zinc at
$1,886.50 a tonne from $1,888.50. 
    Tin was up at $20,800 a tonne from $20,590.
 Metal Prices at 1720 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       315.40       -5.05     -1.58     365.25    -13.65
  LME Alum      1886.25      -26.75     -1.40    2073.00     -9.01
  LME Cu        6981.00     -107.00     -1.51    7931.00    -11.98
  LME Lead      2019.25        5.25     +0.26    2330.00    -13.34
  LME Nickel   15221.00     -309.00     -1.99   17060.00    -10.78
  LME Tin      20681.00       91.00     +0.44   23400.00    -11.62
  LME Zinc      1884.00       -4.50     -0.24    2080.00     -9.42
  SHFE Alu     14615.00      160.00     +1.11   15435.00     -5.31
  SHFE Cu*     50900.00      220.00     +0.43   57690.00    -11.77
  SHFE Zin     14575.00      325.00     +2.28   15625.00     -6.72
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
A couple walks along the rough surf during sunset at Oahu's North Shore, December 26, 2013. REUTERS/Kevin Lamarque

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