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US copper hits 7-month lows on weak demand signals

NEW YORK, Nov 12 (Reuters) - The price of copper fell to its lowest level in seven months in New York futures trade on Monday, after softer Chinese October import data renewed worries about a demand drop-off in the world’s leading metals consumer, analysts said.

“Any hiccup in Chinese demand is going to be bearish for this market,” said Eric Wittenauer, futures analyst with A.G. Edwards in St. Louis.

Copper for December delivery HGZ7 ended down 3.65 cents to $3.1090 a lb on the New York Mercantile Exchange's COMEX division, after dealing between $3.16 and $3.0350, its lowest price since April 2.

By 1 p.m. EST (1800 GMT), estimated futures volumes reached 20,571 lots. On Friday, final volumes hit 19,902 lots.

Open interest in COMEX copper futures fell 940 lots to 80,238 contracts as of Nov. 9.

Chinese imports of unwrought copper and semi-finished products fell 5.6 percent to 204,424 tonnes in October from 216,643 tonnes in September, data posted on the Customs Web site (www.customs.gov.cn) showed on Monday.

The data did not include a breakdown for refined copper, although that figure looked set to fall below 100,000 tonnes in October from 102,078 tonnes in September.[ID:nPEK90143]

The weaker Chinese import numbers added to the market’s growing concern that slower economic growth will continue to crimp demand for the industrial metal.

“If we have a broad European or U.S. slowdown, how does that impact China, where 40 percent of their GDP (gross domestic product) is tied to exports. So it is something that in the near term should prove bearish as well,” Wittenauer said.

China’s central bank raised its reserves requirement by another half a percentage point to 13.5 percent in the latest attempt to soak up domestic liquidity and rein in growth. [ID:nPEK12680]

“Copper’s weakness was on the back of heightened concerns over the possibility that China’s demand may be slowing, which combined with the problems that sub-prime is causing may be enough to bring forward a global economic slowdown,” said William Adams, metal analyst with BaseMetals.com.

Significant builds in visible supply over the past seven months have underscored the current weak state of demand, analysts said.

London Metal Exchange warehouse stocks jumped by 3,425 tonnes to 176,200 tonnes on Monday, and have risen nearly 35 percent since the beginning of October. COMEX copper stock levels were unchanged at 18,948 tons on Friday.

“With yet another stock rise today, the floodgates on the downside seem to have opened up,” said Edward Meir, metals analyst with MF Global in Darien, Connecticut.

Further pressure stemmed from news that Peru’s mining unions called off a five-day strike on Friday, with the work stoppage having little impact on output.[ID:nN09336044]

In trade data released after the close on Friday, open interest in COMEX copper futures declined in the week ended Nov. 6, and both noncommercial and nonreportable speculators raised their net short positions, data from the Commodity Futures trading Commission showed.

The CFTC said total open interest in COMEX copper futures stood at 83,317 lots during the week, from 86,013 lots a week earlier.

The noncommercial net short position grew to 3,124 lots by Nov. 6 from 2,657 net shorts at Oct. 30.

In London, copper for delivery in three months MCU3 closed down 1.3 percent or $90 to $6,950/$6,960 a tonne from Friday's close. (Reporting by Chris Kelly, editing by Matthew Lewis)

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