* Some Chinese banks tripled writeoffs on bad loans
* Commerzbank wary about nickel rally continuing
* Loose Fed policy whets appetite for aluminium financing
By Maytaal Angel and Eric Onstad
LONDON, Oct 23 Copper slid more than 2 percent
on Wednesday as fears of tighter monetary policy in top metals
user China outweighed speculation that tepid U.S. jobs data will
deter the Federal Reserve from tapering its stimulus this year.
Some of China's big banks were tripling writeoffs on bad
loans, according to reports. Short-term Chinese money rates
surged on the policy concerns.
China consumes about 40 percent of the world's copper.
Benchmark three-month copper on the London Metal Exchange
failed to trade in closing open outcry activity, but was
last bid 2.2 percent at $7,171 a tonne. This more than cancelled
out the previous session's 1.2 percent gain.
Copper hit a one-month high on Tuesday after the first U.S.
jobs report since the partial government shutdown suggested that
the economy had lost steam, supporting expectations that the
Federal Reserve will delay tapering its stimulus programme.
Nine of 15 U.S. primary dealers surveyed by Reuters on
Tuesday now expect the Fed to begin slowing its $85
billion-a-month bond-buying programme in March.
"The fed tapering (delay), the global economy strengthening
slowly - these factors help solidify the (copper price) floor,
but what is the bullish trigger to break out of the range? I
don't see it," Societe Generale analyst Robin Bhar said.
"There's more supply coming through. Is China going to be
aggressively pushing its economy forward, the answer is no,
(so)more rangebound trading will continue to the year end at
Copper prices hit the highest since Sept. 20 on Tuesday at
$7,350 a tonne but have been in a broader $7,000-$7,420 band
since early August.
While the prospect of extended U.S. monetary stimulus is
supportive for metals, sluggish U.S. growth is doing little to
improve copper's demand outlook amid rising supply. The market
is seen in a surplus both this year and next.
Bond buying helps to prop up commodities by allowing greater
liquidity for both business and investors, while weakening the
dollar, which makes dollar-priced commodities less expensive for
holders of other currencies.
The U.S. currency tentatively steadied near a two-year low
versus the euro on Wednesday after its latest slide.
In China, a government source said it will retain a ban on
overseas commodity exchanges setting up warehouses there,
dashing expectations for London Metal Exchange warehouses in the
newly launched Shanghai free trade zone.
WARY ABOUT NICKEL UPSIDE
Nickel prices also backtracked after surging on Tuesday to
the highest levels in about two months on worries about a
planned export ban in Indonesia next year.
Commerzbank said those concerns were overblown and that any
shortfall from Indonesia could be made up from rival producers
such as Philippines and from ample inventories.
"We therefore see only limited upside potential for the
nickel price," it said in a note.
"By the end of 2013 we envisage a nickel price of $14,600
per tonnne, and expect to see nickel trading at $15,400 per ton
on average next year."
LME nickel closed down 1.7 percent at $14,595 a
tonne after gaining 3.4 percent on Tuesday and touching a high
Packaging metal aluminium fell 1.9 percent to $1,844
a tonne, having hit its highest since late August on Tuesday.
Shares of top aluminum producer Alcoa Inc made their
biggest one-day move in nearly two years on Tuesday. While the
reasons were unclear, there is some speculation that the
prospect of delayed tapering of U.S. monetary stimulus has
whetted appetite for aluminum financing.
Zinc finished 1.5 percent lower at $1,932 a tonne
and tin shed 1.7 percent to close at $22,800 a tonne.
Lead failed to trade on the kerb and was last bid at
$2,172.50, down 1.5 percent.
Three month LME copper
Most active ShFE copper
Three month LME aluminum
Most active ShFE aluminum
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin