* LME aluminium rallies for fifth day
* Anglo American reports higher copper production
(Updates with closing prices)
By Alexandra Reza
LONDON, July 17 Copper prices fell to their
lowest level in two weeks on Thursday amid growing concern over
the outlook for metal demand from the property sector after a
Chinese builder warned of a possible bond default.
Three-month copper on the London Metal Exchange hit
its weakest since July 2 at $7,030.25 a tonne in intraday trade,
before paring losses. It failed to trade in closing open-outcry
activity and was last bid at $7,065, down 0.2 percent.
China's Huatong Road & Bridge Group had said on Wednesday
that it might not be able to repay a $65 million debt due next
week, possibly becoming the first borrower to default in the
country's largest bond market.
Economic growth in China picked up slightly in the second
quarter thanks to state stimulus measures, but analysts said
Beijing needs to offer more support to meet its annual growth
target in the face of a slowing property market.
China is the world's top copper consumer, accounting for
about 40 percent of global demand.
"This (news from Huatong Road & Bridge Group) reflects the
ongoing concern that the (Chinese) housing market has been
overinflated. The property sector could stay weak for some time,
which would be a drag for copper," said Robin Bhar, an analyst
at Societe Generale.
He expects copper demand to weaken this year and more supply
to enter the market in the second half.
In the latest sign of a rise in supplies, Anglo American
reported higher copper and iron ore output for the first
half of the year.
The metal used in power and construction has fallen roughly
2 percent since it hit a 4-1/2 month high at $7,212 in early
July after encouraging U.S. labour market data and upbeat
Chinese factory numbers.
U.S. data was mixed on Thursday as jobless claims
unexpectedly fell, suggesting the labour market recovery was
gaining traction, but there was a tumble in housing starts.
"Some of the (copper) bears will be looking for excuses to
sell and point to technical analysis that suggests prices may
have gotten ahead of themselves ... There are a few things
unsettling markets at the moment," said Joel Crane, of Morgan
Stanley in Melbourne.
ALUMINIUM SUPPLY CONCERNS
In other metals, aluminium was up for the fifth
consecutive session, lifted by supply concerns. The metal surged
to a 16-month peak on Wednesday and added 0.9 percent on
Thursday to close at $1,989 a tonne.
Aluminium stocks MALSTX-TOTAL in LME-registered
warehouses, which have fallen below 5 million tonnes, are down
almost 9 percent since the start of the year.
Bhar said the rally in aluminium may not be sustainable.
"This rally is based on speculation, but the market is still
oversupplied. It's not fundamentally as strong as ... other
metals, and I expect prices to drift lower."
Also keeping the market cautious, the United States imposed
its most wide-ranging sanctions yet on Russian companies,
including Gazprombank, Rosneft and other
major banks and energy and defence companies. Safe-haven assets
such as gold, yen and German bonds rose after the announcement.
Nickel ended down 0.5 percent at $19,200; zinc
was barely changed, down 0.04 percent at $2,302; and
lead shed 0.7 percent to close at $2,190.
Tin failed to trade in closing rings and was last
bid at $22,100, up 0.1 percent.
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 Eric
Onstad in London; Editing by Keiron Henderson and Pravin Char)