METALS-Copper steady, China worries offset U.S. growth hopes

Wed Jan 8, 2014 5:48am EST

* Indonesian mining ministry looks to ease mineral export ban

* Index rebalancing for 2014 gets underway, zinc selling seen

* Coming Up: FOMC releases the Minutes of December meeting

By Maytaal Angel

LONDON, Jan 8 (Reuters) - Copper was little changed on Wednesday as a strong dollar and concerns about economic recovery in China were offset by expectations for strong U.S. growth.

The dollar rose against a currency basket after data showed Tuesday that the U.S. trade deficit shrank to its lowest in four years, thanks mainly to booming energy production, prompting analysts to revise up growth forecasts.

A strong dollar makes dollar-priced metals costlier for non-U.S. investors.

The latest figures offered investors reassurance that the Federal Reserve's decision to taper its asset buying was justified by fundamentals. Minutes of the Fed's December meeting and the ADP private sector jobs report are due later and will be closely watched for clues on the tapering outlook.

Still, copper is struggling to gain traction, having hit its lowest in nearly two weeks on Monday on worries about growth in top consumer China, where the government has issued new rules to strengthen regulation of shadow-bank lending.

"There's counter-balancing forces, on the one hand inventories are being drawn on the other hand there's some degree of concern over China. We've been sideways since January but prices have been up since December, and latest data showed money managers moving to net long positions," said Citi analyst David Wilson.

Benchmark three-month copper on the London Metal Exchange dipped 0.01 percent at $7,350.25 a tonne by 1013 GMT, after falling to a near two week low of $7,278.75 a tonne on Monday. Copper is trading flat for the year so far, after losing about 7 percent of its value in 2013.

Euro zone unemployment was unchanged at a record high for the eighth month in a row in November, but retail sales made the biggest monthly jump in 12 years, leaving European shares near 5-1/2 year highs, helped also by receding borrowing costs in the zone's periphery.

In China, annual economic growth likely slowed a touch in the fourth quarter, a Reuters poll showed, confirming market views that the world's second-largest economy lost some vigour as Beijing shifts its focus to reforms.

Muddying the picture this week will be index rebalancing as the top two commodities indexes rebalance their weightings for 2014, with zinc set to come under selling pressure, Mark Keenan of Societe Generale said.

The S&P GSCI and The Dow Jones-UBS Commodity Index (DJ-UBSCI) typically rebalance in the first-half of January.

Nickel was down 0.26 percent at $13,480 a tonne, while tin was up 0.57 percent at $21,925 a tonne, with LME stocks falling to a new two-year low at 260,610 tonnes.

Indonesia's mining ministry on Wednesday sought to ease a looming mineral export ban by proposing a regulation that would allow shipments of some mineral ore concentrates to continue until 2017.

Indonesian government officials are scrambling to pass regulations to ease a ban on unprocessed mineral ore exports from Jan. 12.

Refined tin shipments from top exporter Indonesia rose to 13,562 tonnes in December, up 161 percent from November and the highest in more than two years, a trade ministry official said.

PRICES

Three month LME copper CMCU3

Most active ShFE copper SCFcv1

Three month LME aluminium CMAL3

Most active ShFE aluminium SAFcv1

Three month LME zinc CMZN3

Most active ShFE zinc SZNcv1

Three month LME lead CMPB3

Most active ShFE lead SPBcv1

Three month LME nickel CMNI3

Three month LME tin CMSN3

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