METALS-Copper comes off 3-week high ahead of Chinese data

Tue May 7, 2013 12:39pm EDT

* Investors await China trade data due on Wednesday
    * LME copper stocks lowest since early April
    * Near-record nickel stocks weigh on market


    By Maytaal Angel and Eric Onstad
    LONDON, May 7 (Reuters) - Copper failed to sustain a three-week high on
Tuesday as investors nervously awaited economic data this week from top metals
consumer China and due to persistent concern about global metals demand despite
a recent decline in copper inventories.         
    Chinese trade data will be released on Wednesday and traders expected it to
show copper arrivals eased slightly in April. Inflation numbers are due on
Thursday and money supply and loan growth expected from Friday. 
    Copper prices may have over-reacted on Friday when they soared by more than
6 percent after a strong U.S. jobs report helped fuel hopes that an improvement
in the world's largest economy would spur global growth, a London trader said.
    "We may have done a bit too much on Friday and now people are a bit wary
about the Chinese data tomorrow," he said. "We really need to break through
$7,400 to make more gains on the upside."
    Three-month copper on the London Metal Exchange (LME) touched a
session peak of $7,374 a tonne on Tuesday, the highest in three weeks, but
failed to sustain the higher levels, closing unchanged at $7,265. 
    Copper has lost 14 percent since hitting $8,346 a tonne in early February,
the highest so far in 2013. Last month, copper hit its lowest in a year and a
half following weak growth data from China.
    "The first quarter underperformance of Chinese growth has put many investors
on the sidelines. (Meanwhile) the new government is looking for long-term rather
than short-term solutions," ANZ analysts said in a note.    
    "While we do expect Chinese demand to improve (this quarter), the stronger
seasonal demand profile may end up being lukewarm." 
    China is the world's top copper consumer, accounting for some 40 percent of
overall consumption. Its refined copper imports fell 36.7 percent from a year
ago to 218,823 tonnes in March, but the steep fall in London copper prices in
mid-April has opened the window for Chinese imports, with benchmark LME copper
currently trading at a discount of about $39 to its Shanghai counterpart.
    Still, some investors remained heartened by the decline in copper stocks  in
both Shanghai and on the LME. Shanghai stocks have declined to 213,782 tonnes,
their lowest since late February, while LME stocks are at 604,600, their lowest
since early April, having hit their highest in nearly a decade in late April.  
    "We can (expect copper) closer to $8,000 a tonne this quarter. There's a
lack of scrap especially in China, premiums have increased, there's a
backwardation on Shanghai markets, things have tightened up because prices have
been so low," said Societe Generale analyst Robin Bhar. He added, however: "This
is certainly not the start of a new bull run, it's just a corrective bounce."

    STOCKS WEIGH ON NICKEL   
    Nickel closed unchanged at $15,200 a tonne after earlier sliding by
as much as 1.7 percent.
    Analyst Edward Meir at INTL FCStone said near record levels of nickel
inventories would continue to weigh on the market. "Metal seems to be heading
into warehouses that have not stored nickel in years, yet more evidence that
exchanges are being viewed as buyers of last resort," he said in a note.
    "We cannot get too excited about nickel prospects over the short-term and
once more normal conditions set in after Friday's bounce, we expect to see a
$14,400 - $15,700 trading range set in over the balance of May."     
    Aluminium ended virtually unchanged, down $1 at $1881 a tonne, while
zinc ended 0.66 percent weaker at $1,872.50 a tonne and tin fell
1.22 percent to $20,200.
    Lead failed to trade in closing rings and was bid at $2,026 a tonne,
down 0.6 percent from the previous close. 
    
 Metal Prices at 1629 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       330.00       -0.75     -0.23     365.25     -9.65
  LME Alum      1882.00      -17.00     -0.90    2073.00     -9.21
  LME Cu        7276.25       11.25     +0.15    7931.00     -8.26
  LME Lead      2032.50       -5.50     -0.27    2330.00    -12.77
  LME Nickel   15175.00      -25.00     -0.16   17060.00    -11.05
  LME Tin      20213.00      538.00     +2.73   23400.00    -13.62
  LME Zinc      1873.00      -12.00     -0.64    2080.00     -9.95
  SHFE Alu     14550.00      -60.00     -0.41   15435.00     -5.73
  SHFE Cu*     52410.00     -480.00     -0.91   57690.00     -9.15
  SHFE Zin     14525.00      -95.00     -0.65   15625.00     -7.04
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07