June 21, 2013 / 2:02 PM / 4 years ago

METALS-Copper gains but 20-month lows in sight on China woes

* Copper hits lowest since Oct. 2011
    * Fears of banking crunch in China ease
    * LME, Shanghai copper inventories rise

    By Susan Thomas
    LONDON, June 21 (Reuters) - Copper came off a 20-month low
on Friday but remained on track for a third weekly fall on fears
of a slowdown in China's economic growth.
    Three-month copper on the London Metal Exchange was
up 0.87 percent at $6,829 a tonne at 1348 GMT, off an intraday
low of $6,692, its weakest since October 2011. The metal is on
course for a weekly loss of nearly 4 percent.
    BNP Paribas analyst Stephen Briggs cited two factors
supporting the price. "One is that there appeared to be some
intervention by the central bank in China to stabilise the
situation with the liquidity crunch," he said. "Also, losses
have been pretty substantial in the last few days, and you
always get some kind of bounce."
    Base metals, along with other financial markets, have been
hammered after the U.S. Federal Reserve said on Wednesday that
by mid-2014 it would curb its programme of monthly liquidity
injections which have supported commodity prices since the
financial crisis.
    Fears of an immediate banking crunch in China eased
overnight on market talk the central bank had guided the biggest
state lenders to provide more short-term funds to smaller banks.
China's short-term funding rates remain elevated,
however. 
    Indicating poor demand for copper, data showed inventories
in warehouses monitored by the Shanghai Futures Exchange rose
3.2 percent from last Friday, while daily LME data showed stocks
rose by 21,725 tonnes to 664,850, their highest level in a
decade. 
    Data on Thursday showed China's factory activity had
weakened to a nine-month low in June, heightening the risk of a
sharper second-quarter slowdown and helping push copper to a
20-month low early in the session. 
    "With many complexes now clearly oversold in base metals, we
should start to stabilise heading into next week as new (albeit
lower) trading ranges start to get carved out," said INTL FC
Stone analyst Ed Meir.
    Lending copper some support, however, Chinese refined copper
imports rose to 232,155 tonnes in May from April's 183,023,
although they were down 23.15 percent year on year, customs data
showed. 
    Aluminium dipped 0.07 percent at $1,795.75 a tonne
in rings, having earlier hit $1,787 a tonne, its lowest level in
more than three years. 
    "We think aluminium could come under additional selling
pressure, with LME aluminium stockpiles hitting record high
levels of 5.43 million tonnes," ANZ said in a report.
    "High supply in the market appears to be offsetting reports
of China's government looking to block plans to build 10 million
tonnes of new lower cost capacity in the Xinjiang province
alongside recent smelter cuts."
    Tin rose 1.59 percent to $19,810 a tonne. The metal
had tumbled to its lowest in 9-1/2 months on Thursday.
    Indonesia, the world's top exporter, plans to revise export
rules from next month to push for physical trading and
price-setting on the domestic market. 
    
 Metal Prices at 1352 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
                                                              move
  COMEX Cu         3.08        0.02     +0.64     365.25    -99.16
  LME Alum      1796.00       -1.00     -0.06    2073.00    -13.36
  LME Cu        6827.50       57.50     +0.85    7931.00    -13.91
  LME Lead      2024.50        6.50     +0.32    2330.00    -13.11
  LME Nickel   13903.00      203.00     +1.48   17060.00    -18.51
  LME Tin      19800.00      300.00     +1.54   23400.00    -15.38
  LME Zinc      1849.00       19.50     +1.07    2080.00    -11.11
  SHFE Alu     14355.00      -55.00     -0.38   15435.00     -7.00
  SHFE Cu*     49850.00     -270.00     -0.54   57690.00    -13.59
  SHFE Zin     14430.00       45.00     +0.31   15625.00     -7.65
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07

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