* Escondida annual copper output soars 28 pct to 1.1 mln
* U.S. Senate to hold hearing on banks owning commodities
* Zinc falls after large rise in inventories
By Maytaal Angel and Eric Onstad
LONDON, June 17 Copper slipped from near a
one-month high on Wednesday after the U.S. central bank chief
repeated plans to start scaling back its stimulus programme and
following news of an sharp increase in output at the world's
biggest copper mine.
Base metals markets had been nervous ahead of the testimony
of Federal Reserve Chairman Ben Bernanke, who affirmed the bank
would start later this year to prune its $85-billion-a-month
bond-buying programme, which has been supporting financial
But he also sounded a dovish tone, leaving open the option
of changing that plan if the economic outlook shifted, which
knocked the dollar and allowed copper to pare losses.
Three-month copper on the London Metal Exchange
climbed as high as $7,046 a tonne, within reach of a near one
month high hit July 11, before slipping to $6,970 a tonne by
1325 GMT, down 0.4 percent.
Copper changed hands at $6,938 a tonne, down 0.9 percent, in
official midday trading before the prepared testimony from
Bernanke was released, which caused the dollar to weaken.
A softer dollar makes metal priced in the greenback less
costly for European and other non-U.S. investors.
Copper prices have failed to find momentum above $7,000 a
tonne, though they rose to those heights earlier this month
after comments favouring looser U.S. monetary policy for longer
triggered a cross-commodity rally.
"(Overall) the investor community is short copper. With a
more dovish tone from the Fed we could see a bit more of that
short covering," said Credit Suisse analyst Tom Kendall.
"But once you get through the summer period, we are still
bearish on copper and expect to see additional supply coming
through at a faster pace than demand can absorb."
BHP Billiton, majority owner of Escondida in Chile,
the world's single-largest copper mine, said copper output at
the mine rose 28 percent to 1.1 million tonnes in the 2013
The news added to expectations that the copper market will
record a surplus in 2013 for the first time in three years.
Adding support to prices, however, was news that China's
consumption of refined copper is likely to rise in the second
half, buoyed by expected government backing for power sector
investments to support economic growth.
China is the world's largest copper consumer, accounting for
about 40 percent of demand. Its economic growth slowed to 7.5
percent in the second quarter, from 7.7 percent in the first
quarter, leaving a big dent in copper prices, which are down
nearly 13 percent this year.
China's commerce ministry said on Wednesday that it will
soon release measures to support exports and imports, though it
did not give details.
Elsewhere, the U.S. Senate committee will hold a hearing on
whether banks should control physical commodities storage, a
practice that detractors argue has resulted in long queues to
get metals out of LME warehouses.
The queues have prompted rising spot premiums on physical
markets, and have also spurred producers to crank up output in
spite of falling demand, weighing on LME benchmark prices.
In other metals traded, zinc fell 1.2 percent in
official trading to $1,865.50 a tonne, after daily LME stocks
data showed a sharp 75,900 tonne increase in
inventories to 1.077 million tonnes, near their highest level in
over a month.
Lead lost 1.25 percent to $2,049 a tonne, but other
metals bucked the weaker trend.
Aluminium added 0.1 percent to $1,817 a tonne in
official rings, nickel climbed 0.9 percent to $13,890
and tin rose 0.2 percent to $19,500.