METALS-Copper slides as China factory data disappoints

Thu May 23, 2013 3:28am EDT

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    * Coming Up; Euro zone Markit Manufacturing Flash PMI at
0758 GMT


    By Melanie Burton
    SINGAPORE, May 23 (Reuters) - London copper fell as much as
3 percent on Thursday after a preliminary survey showed China's
factory sector contracted in May, hitting sentiment already
soured by concerns the United States may pull back on its
bond-buying program.
    China's factory activity shrank for the first time in seven
months in May as new orders fell, the survey of purchasing
managers showed, adding to concerns that a recovery in the
world's second-largest economy is sputtering. 
    "A reading under 50 is certainly not a good omen and weaker
than what we would have expected," said Matt Fusarelli, analyst
at consultancy AME Group in Sydney.
    China is the world's top copper consumer, accounting for 40
percent of refined demand.
    Also hurting sentiment were fears about the U.S. Federal
Reserve ending its bond-buying program earlier than expected,
eroding liquidity and investment capital available for metals. 
    "For so long people have taken for granted that money will
be free. But as soon as it's not free, then that's when we are
going to see big ruction in metals markets," Fusarelli added.
    Fed Chairman Ben Bernanke said on Wednesday a decision to
scale back the $85 billion in bonds the central bank is buying
each month could come at one of its "next few meetings" if the
economy looked set to maintain momentum. 
    Three-month copper on the London Metal Exchange was
down 2.7 percent to $7,270.75 a tonne by 0703 GMT, erasing gains
from the previous session when it hit a six-week high of
$7,533.75. It touched an intraday low of $7,250.
    Other base metals also fell, with nickel, zinc
 and lead all down nearly 2 percent each and
aluminium off 1.4 percent.
    The most-traded September copper contract on the Shanghai
Futures Exchange lost 2.1 percent to close at 52,350
yuan ($8,500) a tonne.
    A series of mining accidents and plant shutdowns this year
have pushed copper's supply back into the spotlight, supporting
prices. The global market for copper is expected to swing into a
small surplus this year after several years of deficit.
    Last week's shutdown at the world's second-largest copper
mine run by Freeport McMoRan Copper and Gold Inc in
Indonesia will extend until the company is convinced of the
mine's safety, it said. A landslide at Rio Tinto's mine
in Utah had also cut production.  
    India's top copper smelter, run by Sterlite Industries
, also remains shut as a court continues hearing into
complaints of emissions.    
  Base metals prices at 0703 GMT
  Metal              Last       Change   Pct Move YTD pct chg
  LME Cu            7270.75   -204.25     -2.73     -8.30
  SHFE CU FUT SEP3    52350     -1130     -2.11     -9.24
  HG COPPER JUL3     329.40     -8.65     -2.56     -9.82
  LME Alum          1858.00    -26.00     -1.38    -10.28
  SHFE AL FUT SEP3    14615       -20     -0.14     -4.76
  LME Zinc          1848.25    -32.75     -1.74    -10.43
 
  LME Nickel       14898.00   -272.00     -1.79    -13.16
  LME Lead          2018.50    -38.50     -1.87    -13.74
  SHFE PB FUT      13975.00    -35.00     -0.25     -8.36
  LME Tin          21197.00   -278.00     -1.29     -9.41
  LME/Shanghai arb^    -272
 
   Shanghai and COMEX contracts show most active months
   ^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
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