* Copper hits lowest since Oct. 2011
* Fears of banking crunch in China eases
* LME, Shanghai copper inventories rise
By Susan Thomas
LONDON, June 21 Copper came off a 20-month low
on Friday but remained on track for a third weekly fall on fears
of a slowdown in China's economic growth.
Three-month copper on the London Metal Exchange was
$6,810 a tonne in official rings, off an intraday low of $6,692,
its weakest since October 2011. It closed at $6,770 on Thursday.
BNP Paribas analyst Stephen Briggs cited two factors
supporting the price. "One is that there appeared to be some
intervention by the central bank in China to stabilise the
situation with the liquidity crunch," he said. "Also, losses
have been pretty substantial in the last few days, and you
always get some kind of bounce."
Base metals, along with other financial markets, have been
hammered after the U.S. Federal Reserve said on Wednesday that
by mid-2014 it would curb its programme of monthly liquidity
injections which have supported commodity prices since the
Fears of an immediate banking crunch in China eased
overnight on market talk the central bank had guided the biggest
state lenders to provide more short-term funds to smaller banks.
China's short-term funding rates remain elevated,
Indicating poor demand for copper, data showed inventories
in warehouses monitored by the Shanghai Futures Exchange rose
3.2 percent from last Friday, while daily LME data showed stocks
rose by 21,725 tonnes to 664,850, their highest level in a
Data on Thursday showed China's factory activity had
weakened to a nine-month low in June, heightening the risk of a
sharper second-quarter slowdown and helping push copper to a
20-month low early in the session.
Lending copper some support, however, Chinese refined copper
imports rose to 232,155 tonnes in May from April's 183,023,
although they were down 23.15 percent year on year, customs data
Aluminium was $1,793 a tonne in rings, having
earlier hit $1,787 a tonne, its lowest level in more than three
years. It closed at $1,797 on Thursday.
"We think aluminium could come under additional selling
pressure, with LME aluminium stockpiles hitting record high
levels of 5.43 million tonnes," ANZ said in a report.
"High supply in the market appears to be offsetting reports
of China's government looking to block plans to build 10 million
tonnes of new lower cost capacity in the Xinjiang province
alongside recent smelter cuts."
Tin was $19,595 a tonne in rings from $19,500.
Indonesia, the world's top exporter, plans to revise export
rules from next month to push for physical trading and
price-setting on the domestic market.
The metal had tumbled to its lowest in 9-1/2 months on
Zinc was $1,844.50 in rings, from $1,829.50, lead
was $2,024 from $2,018 and nickel was $13,835