* Worries about financing spur traders to offload copper
* Shanghai premiums steady after falling for past week
* StanChart says not pulling out of China commod financing
(Updates with closing prices/details)
By Harpreet Bhal
LONDON, June 10 Copper dropped to a one-month
low on Tuesday as an investigation into metal financing in China
prompted concern that a crackdown could hit trade in the metal,
while aluminium and zinc retreated from multi-month highs as
traders cashed in on recent gains.
Benchmark copper on the London Metal Exchange (LME)
hit a session low of $6,628, its lowest level since May 7. It
was last bid at $6,675 a tonne on the kerb, up just 0.07 percent
from the previous session.
Copper prices have been under pressure by worries about
financing after a investigation into metals fraud at Qingdao,
China's third-largest port.
The latest firm to be caught-up in the scandal, CITIC
Resources Holdings, said that metal it owns at the port may be
affected by the probe.
Some analysts said the market's fundamentals remained
strong, helping cushion any downside to prices. The latest data
from top consumer China showed encouraging signs of an economic
China's consumer inflation edged up to a four-month high of
2.5 percent in May while factory price deflation eased,
reinforcing signs of economic stabilisation.
"The ongoing investigation (at Qingdao port) is still the
main theme which is causing the selling pressure for the metal,"
sad Naeem Aslam, chief market analyst at Ava Trade.
"However, the fundamentals remain strong ... and we think
any kind of sell-off could be a buy opportunity in the longer
Reassuring investors, Standard Chartered said it
acknowledges there are issues in China around commodity
financing and while it is monitoring the situation, it is not
pulling out of its commodity financing business in the country.
In a move that suggests the impact of the financing probe in
China may be becoming priced into the market, premiums for
bonded copper in Shanghai steadied after falling for a week.
Premiums traded at $80-$100 on Tuesday, flat from Monday,
and down from $105-$125 last Wednesday, according to China price
provider Shmet. (www.shmet.com)
ALUMINIUM, ZINC SLIP
Aluminium and zinc prices retreated from recent highs as
traders took profits, but analysts say the longer-term outlook
for the metals remains upbeat.
Benchmark LME zinc closed little changed at $2,132 a
tonne, up just 0.05 percent, having hit a 15-month peak of
$2,145 in the previous session, while benchmark aluminium
was last bid down 0.58 percent at $1,900 a tonne, after
hitting its highest level in 9-1/2 months - at $1,918 - on
Improving global demand prospects have helped to support
prices for zinc and aluminium in particular, led by
stronger-than-expected consumption and tight supply, and
bolstered by continued monetary easing by central banks.
"Generally economic performance is going better than people
have expected ... And that will certainly help prices," said
analyst Matt Fusarelli at AME Group.
Chinese zinc demand is seen growing by 8 percent this year,
the fastest since 2010, driven by auto sales, Fusarelli said.
This is expected to push the market into a deficit for the first
time in several years, he added.
A small deficit in the aluminium market in the first half is
however expected to disappear as large projects come on line,
mostly in China, Fusarelli said.
At 5,146,525 tonnes, aluminium stocks held in LME-registered
warehouses are at their lowest level in a year. MALSTX-TOTAL
Lead ended at $2,140 a tonne, down 0.05 percent, tin
closed down 1.85 percent at $23,865 a tonne and nickel
closed down 0.69 percent at $18,775 a tonne.
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 and Polly Yam
in Hong Kong; Editing by Mark Potter and David Evans)