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METALS-Copper at two-month low on firmer dollar, inventory rise

    * LME/ShFE arb:

 (Adds closing prices)
    By Zandi Shabalala
    LONDON, Dec 5 (Reuters) - Copper had its biggest drop for
two years on Tuesday with the price hitting its lowest level in
two months as inventories rose and the dollar firmed on
expectations of U.S tax reform.
    Benchmark copper         closed 4.2 percent lower at $6,542
per tonne, after touching its lowest level since Oct. 5 at
$6,533.50. The metal, which is widely used in power systems and
construction, fell by the most in one session since July 2015.
    "Because of the strength of the dollar this week we are
seeing metal prices which are denominated in dollars coming
under pressure," analyst Fawad Razaqzada said.
    A trader said there was also market talk that demand for
copper was set to weaken due to plentiful stocks, adding that
the next support is seen at $6,440-$6,480.
    * DOLLAR: The dollar index       , which measures the
greenback against a basket of major currencies, firmed for a
second straight session on continued optimism surrounding U.S.
tax reform.                   
    A stronger greenback makes dollar-denominated assets such as
copper more expensive for holders of other currencies.
    * INVENTORIES: Placing further pressure on copper were
inflows of stocks at LME-registered warehouses. Headline stocks
in copper MCUSTX-TOTAL rose 10,650 tonnes to 192,550 tonnes.  
    * CHINA SERVICES DATA: The Caixin/Markit services purchasing
managers' index (PMI) rose to 51.9 in November, up from 51.2 in
October and the highest reading since August.             
    Razaqzada said the services data had less impact on the
prices than Friday's manufacturing data, which came in below
    * TECHNICALS: "Whilst China property concerns remain, steady
global growth expectations coupled with on-going mine supply
disruptions likely to lend support on dips with $6,550-$6,650
the bottom of a new range," Alastair Munro at broker Marex
Spectron said in a note. 
   * 2018 METALS OUTLOOK: BMI Research said it expects
industrial metal prices in 2018 to consolidate due to a marked
slowdown in China's metals consumption growth.
    * CHINA ALUMINIUM: Henan Mingtai Aluminum            , one
of China's biggest aluminium sheet makers, said it expected
production and sales to keep growing in 2018 despite the launch
of U.S. trade probes into imports of the product from China.
    Benchmark LME aluminium         fell 0.8 percent to $2,052
per tonne.
    * PRICES: Zinc         fell 2 percent to $3,112 per tonne,
lead         ended 0.3 percent lower to $2,500, tin        
ended unchanged at $19,525 while nickel         slumped to its
lowest level in nearly two months at $10,865 a tonne, down 4.6

 (Additional reporting by James Regan in Sydney and Peter Hobson
in London; Editing by Louise Heavens/Greg Mahlich/Alexander