* Investors concerned about growing surplus
* Dollar and shares weaken on U.S. government shutdown
* Liquidity thin with China away for holiday
By Maytaal Angel and Freya Berry
LONDON, Oct 2 Copper hit a one-week low on
Wednesday as worries about the wider impact of the first partial
U.S. government shutdown in 17 years cut risk appetite, with a
weaker dollar limiting losses.
Benchmark three-month copper on the London Metal Exchange
traded down 0.22 percent at $7,182 a tonne in official
midday rings, from a close of $7,199 on Tuesday. The contract
earlier touched a low of $7,142, its weakest since Sept. 24.
As the U.S. government shutdown entered a second day,
President Barack Obama scaled down a long-planned trip to Asia.
The dollar weakened to its lowest since late August against
the yen and shares lagged as investors feared that the deadlock
over the Congress funding row could drag on, and worries grew
about its implications for talks on raising the U.S. public debt
ceiling later this month.
A weaker dollar makes dollar-priced metals cheaper for
Investors are also concerned about a looming copper market
surplus that has come just as top consumer China's stellar
appetite for some commodities weakens.
"Prices have weakened on the U.S. situation ... but the
reason that base metals are more affected (than equities) is
because there's an underlying current in copper where the
fundamentals have deteriorated," said Stephen Briggs, strategist
for BNP Paribas.
"The latest Chinese data was not that brilliant," he added.
"It's just not the dynamic force it once was. It's good but not
Trading volume was thin with China, which accounts for 40
percent of global refined copper demand, away until Oct. 7 for
National Day holidays. Copper has lost nearly 10 percent this
As a result of the U.S. shutdown, investors may be unable to
take cues from key U.S. government data, such as the monthly
jobs report that is due on Friday but will not be released if a
deal is not reached by then.
A drop-off in U.S. economic data at a time when the Federal
Reserve has muddied expectations on when it will start reducing
its stimulus could hit demand for risky assets such as copper.
Sijin Cheng, commodity analyst at Barclays Capital, said
while the shutdown and a lack of liquidity have been a drag on
copper, prices are poised to drop further as supply outpaces
"We still think that the increasing supply will take the
spotlight," said Cheng, who sees cash copper CMCU0 averaging
$6,850 in October-December, with a global surplus of 373,000
tonnes for the period.
The first significant private survey after the shutdown
began - the Institute of Supply Management's report on
manufacturing - showed the fastest expansion in almost 2-1/2
years, which helped Asian stocks and the dollar.
Soldering metal tin was untraded in rings, but last
bid was down 1.41 percent at $22,725 a tonne in official rings
against $23,050 on Tuesday, having earlier hit a near-three week
low of $22,550. Aluminium was last bid down 0.33 percent
LME nickel was last bid down 0.36 percent to $13,700
against a previous close of $13,750 per tonne, its worst
performance since the end of July. The stainless-steel
ingredient has fallen 20 percent this year.
Zinc was traded down 0.56 percent at $1,866 a tonne,
from $1,878 on Tuesday, while lead traded down 0.05
percent at $2,064 from a previous close of $2,065.