* China factory output, consumer spending weaker than expected
* China Feb inflation at 10-month highs; Fitch downgrades Italy
* Some post-holiday trade buying emerges in China, cushions prices
By Maytaal Angel and Natalie Huet
LONDON, March 11 Copper hit a week's low on Monday, as
disappointing data from China and concerns about Italy dented risk appetite
while a strong dollar pressured prices, but demand for metals from Chinese
consumers helped erase losses.
Official data released at the weekend in China - which consumes 40 percent
of the world's copper - showed inflation at a 10-month high in February while
factory output and consumer spending were weaker than forecast.
"All the data together very much paints the picture of Chinese growth in the
early part of the year being weaker than people had expected, so that's not a
great start to the week," said Nic Brown, head of commodities research at
Also weighing on metals prices, the dollar index hovered near seven-month
highs hit on Friday after much stronger-than-expected U.S. jobs data. A strong
greenback makes dollar-priced metals costly for European investors.
In Europe, Fitch downgraded Italy's credit rating by one notch to BBB-plus,
with a negative outlook, citing political uncertainty following last month's
Three-month copper on the London Metal Exchange closed at $7,755 a
tonne, up from a previous close of $7,740, having earlier hit a one-week low of
$7,667 a tonne. Aluminium, lead and zinc prices all closed down after having hit
their lowest level in more than three months.
Copper last week showed its first higher weekly close in four, though the
metal remains down more than 2 percent for the year with post-holiday demand
from China having disappointed.
The copper market is expected to record a surplus this year for the first
time since 2009, while LME copper stocks have been rising consistently this
year, and are currently at 513,550 tonnes, their highest since April 2010.
Stocks in Shanghai bonded warehouses are estimated at around 900,000 tonnes,
while Chinese imports have been falling consistently as traders dip into local
supplies rather than restock.
CHINA CONSUMERS START BUYING
Still, Chinese traders said some buying was supporting LME prices, helped by
higher prices of Shanghai copper compared with the landed cost of LME metal,
which attracts a 17 percent value-added tax for imports.
"A bit late but they (consumers) finally came in after Lunar New Year," said
a trader based in Shanghai.
Analyst Bonnie Liu of Macquarie in Shanghai concurred: "Post Lunar New year,
we are definitely seeing demand pick up.
"China's macro picture is getting better but there's still a lot of
uncertainty, especially on the details of the public policy to be released this
week," she added.
Communist Party chief Xi Jinping formally takes over as China's new
president during the annual meeting of the National People's Congress which ends
on March 14.
In other metals traded, tin closed at $23,700 a tonne, down from
$23,795 on Friday, while zinc closed at $1,960.50 a tonne, down from
$1,975, having earlier hit a 3-1/2 month low at $1,928.
Lead closed at $2,196 a tonne, down from a previous close of
$2,212.50 but above a more than three-month low of $2,176 hit earlier. Aluminium
closed at $1,951.50 a tonne, down from $1,965, having earlier hit a
3-1/2 month low at $1,934.85 a tonne. Nickel closed at $16,875 a tonne,
up from $16,740.
"Prices (for nickel) seem to be holding up relatively well and are in a
congestion range, perhaps due to the fact that nickel was among the earliest
metals to start declining and may be ahead of the rest of the group," said
Edward Meir, analyst at INTL FCStone.
Natixis's Brown said zinc prices had only very limited upside due to high
production capacities, but that aluminum prices could benefit from output
cutbacks from major producers around the world, including in China.
"The Chinese authorities made it very clear that they are looking to cut
back output in industries that are polluting, that are energy-intensive and that
are subject to overcapacity. Now if base metals like aluminium are not high on
that list I don't know what is," he said.
Metal Prices at 1718 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
COMEX Cu 350.70 0.80 +0.23 365.25 -3.98
LME Alum 1951.75 -13.25 -0.67 2073.00 -5.85
LME Cu 7757.00 -8.00 -0.10 7931.00 -2.19
LME Lead 2197.00 -15.50 -0.70 2330.00 -5.71
LME Nickel 16826.00 86.00 +0.51 17060.00 -1.37
LME Tin 23654.00 -141.00 -0.59 23400.00 1.09
LME Zinc 1962.75 -12.25 -0.62 2080.00 -5.64
SHFE Alu 14800.00 -75.00 -0.50 15435.00 -4.11
SHFE Cu* 56480.00 -270.00 -0.48 57690.00 -2.10
SHFE Zin 15145.00 -95.00 -0.62 15625.00 -3.07
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07