METALS-Copper slumps to 7-week low on China demand fears

Wed Aug 13, 2014 12:13pm EDT

Related Topics

* China property investment falls in July

* Nickel prices could hit $25,000 by mid/late 2015-BNP Paribas

* U.S. retail sales unchanged in July, held back by autos (Updates with closing prices)

By Harpreet Bhal

LONDON, Aug 13 (Reuters) - Copper fell to a seven-week low on Wednesday, dragged down by disappointing data on top consumer China's property sector, which raised concerns about the outlook for the metal used in power and construction.

Three-month copper on the London Metal Exchange (LME) fell to a session low of $6,874 a tonne, its weakest level since June 25. It was untraded at the close but last bid at $6,885 from $6,965 at the close on Tuesday.

China's real estate investment slowed and property sales fell sharply in July despite efforts by many local governments to shore up the troubled sector.

Data also showed disappointing activity for retail sales, with growth not as strong as expected, offsetting factory output numbers that were within expectations.

China is the world's top copper consumer, accounting for around 40 percent of global refined demand.

"We're not very positive on the demand outlook because of the property sector, and the data has just confirmed what we had been expecting," said Caroline Bain, a senior commodities economist at Capital Economics.

The crisis in Ukraine has also sapped investor confidence by threatening a fragile economic recovery in Europe. Investor morale in economic powerhouse Germany plunged in August, sparking jitters over industrial demand.

"Investors play a big role in the copper market, so you're going to see the copper price respond to some of these tensions," analyst James Glenn of National Australia Bank in Melbourne said.

Separate data showed the amount of money flowing into China's economy slowed to the lowest level in nearly six years in July, adding to fears that a sustained recovery may be at risk in the second half of the year.

U.S. retail sales unexpectedly stalled in July, pointing to some loss of momentum in the economy early in the third quarter.

The Commerce Department said on Wednesday retail sales, which had increased 0.2 percent in June, were in part held back by a second straight month of declines in receipts at auto dealers. July's reading was the weakest since January.

In other metals, nickel prices could hit $25,000 a tonne by mid to late 2015, BNP Paribas said. This would represent gains of a further 34 percent from current LME nickel. Nickel was untraded at the close but last bid at $18,560 per tonne from $18,750 at the close on Tuesday.

Refined tin shipments from top exporter Indonesia rose 9 percent to 7,645 tonnes in July from the previous month, a trade ministry official said.

Tin closed at $22,400 a tonne from $22,475 at the close on Tuesday, while zinc closed at $2,283 from $2,330, lead at $2,220 per tonne from $2,262 and aluminium at $2,026 per tonne from $6,965.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin

(Additional reporting by Melanie Burton in Sydney; Editing by Pravin Char and Jane Baird)

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