METALS-Copper, nickel fall as U.S., China data boost demand worries

Wed May 1, 2013 12:28pm EDT

* Nickel hits lowest in 3-3/4 years after stocks rise to record
    * China manufacturing unexpectedly slows in April
    * U.S. firms hired smallest number of workers in seven months
    * Investors await Federal Reserve statement


    By Susan Thomas
    LONDON, May 1 (Reuters) - Copper slid on Wednesday, extending its deepest
monthly drop in almost a year in April, due to concerns over growth in top metal
consumer China and in the United States after data suggested the world's two
biggest economies remain fragile.
    Nickel touched its lowest level in 3-3/4 years in broad-based selling after
data showed growth in Chinese manufacturing unexpectedly slowed last month. Also
LME nickel inventories climbed by 1,440 tonnes to a new record of
178,476 tonnes, evidence of a market surplus.
    Three-month nickel on the London Metal Exchange closed down 3.7
percent at $14,820 a tonne after earlier tumbling to a session low of $14,788 a
tonne, the weakest since July 2009. 
    Benchmark copper also ended 3.7 percent weaker at $6,795 per tonne
after touching a session low of $6,786.25, close to the 18-month lows hit last
week. Copper fell by more than 1 percent in the previous session and lost 6.4
percent in April, the most since May 2012.
    By contrast European stock markets had the best April since 1997, and the
month marked the 11th straight monthly gain for the broad STOXX Europe 600 index
.
    "Equities tend to look further ahead, so I think to some extent it's an
expectation of where the world might be in a year's time," Standard Chartered
analyst Dan Smith said.
    "The problem is that China is looking quite poor, which has really weighed
on the whole base metals complex. Another problem for base metals is that Europe
still looks pretty abysmal."
    China's official purchasing managers' index (PMI) declined to 50.6 from
March's 11-month high of 50.9 as new export orders and input prices contracted.
 China accounts for 40 percent of global copper consumption and
Europe around 20 percent. 
    U.S. data showed companies hired the smallest number of employees in seven
months in April and manufacturing growth slowed, providing more signs that the
economy is encountering a soft patch. 
    The global copper market showed a 70,000 tonne surplus in January this year,
compared with a 60,000 tonne deficit in the same month last year, reflecting
lower demand for the metal, which is widely used in construction and power
cables. 
    
    
    U.S. FED, ECB IN FOCUS   
    On the LME, trade volumes were weak in Asian trading but picked up for
copper as it broke below the $7,000 a tonne mark and amounted to about 22,000
lots by the close of open-outcry activity.
    Most markets in Asia were closed on Wednesday, and many markets in Europe
including France and Germany were also shut for Labour Day holiday. The Shanghai
Futures Exchange will reopen on Thursday.
    Financial markets will focus later in the day on the outcome of a U.S.
Federal Reserve two-day policy meeting and on Thursday will look to the results
of a European Central Bank meeting.
    Fed members are widely expected to keep the current pace of bond buying at
$85 billion a month due to recent weak economic data. 
    Aluminium failed to react to news that Alcoa said it could shut down
as much as another 11 percent of its smelting capacity. 
    The company, which already has 568,000 tonnes, or 13 percent, of its
smelting capacity sitting idle, said it will review 460,000 tonnes of capacity
for curtailment over the next 15 months. 
    LME aluminium did not trade in closing open outcry activity, but was
bid at $1,824 a tonne, down 2.4 percent from Tuesday's close. 
    Lead closed 2.4 percent down at $1,979 after hitting an eight-month
low of $1,970 and zinc ended 1.5 percent lower at $1,840.
    Tin also failed to trade in closing rings and was bid $19,950 a
tonne, down 2.1 percent. 
    
 Metal Prices at 1610 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       307.65      -10.85     -3.41     365.25    -15.77
  LME Alum      1825.50      -73.50     -3.87    2073.00    -11.94
  LME Cu        6803.00     -252.00     -3.57    7931.00    -14.22
  LME Lead      1966.75      -60.25     -2.97    2330.00    -15.59
  LME Nickel   14822.00     -568.00     -3.69   17060.00    -13.12
  LME Tin      19900.00     -470.00     -2.31   23400.00    -14.96
  LME Zinc      1835.00      -33.00     -1.77    2080.00    -11.78
  SHFE Alu     14670.00       35.00     +0.24   15435.00     -4.96
  SHFE Cu*     51940.00      790.00     +1.54   57690.00     -9.97
  SHFE Zin     14745.00       75.00     +0.51   15625.00     -5.63
 ** 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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