December 6, 2017 / 5:51 AM / 12 days ago

METALS-Shanghai copper prices fall sharply on China demand jitters

 (Adds Shanghai closing prices, updates London prices)
    BEIJING, Dec 6 (Reuters) - Shanghai copper fell more than 3
percent on Wednesday, its biggest daily plunge in more than a
year, tracking a steep drop on the LME as investors wound in
profits on concerns China could see a weaker first half of next
year. 
    Analysts said besides a rise in copper inventories, the
selloff was fuelled by concerns about liquidity tightness in
China towards the year-end, amid a government-led deleveraging
push, and slowing investment in the country's power sector, a
key driver for copper. 
    The "sluggish investment in power indicates copper demand in
China may remain weak for a while," Helen Lau, an analyst at
Argonaut Securities, wrote in a note, adding that she expected
to see "more downward pressure" on the metal over the short
term.
        
    FUNDAMENTALS
    * SHFE COPPER: The most-traded Shanghai Futures Exchange
copper contract fell 3.8 percent in morning trade
before closing down 3.1 percent at 51,410 yuan ($7,772.55) a
tonne, its biggest one-day drop since November 2016. 
    * TECHNICALS: The ShFE copper contract's slump took it below
the 200-day moving average (DMA), a technical indicator, sending
a bearish signal to markets. 
    * LME COPPER: Three-month copper on the London Metal
Exchange was trading up 0.1 percent at $6,547 a tonne by
0713 GMT, having plummeted 4.2 percent on Tuesday as inventories
rose by over 10,000 tonnes. Prices saw the steepest daily drop
since July 2015 in the previous session.
    * SUPPORT: LME copper may test support at $6,492 a tonne, a
break below which could cause a loss to the next support at
$6,451, according to Reuters analyst Wang Tao.
    * PUTS: Traders pointed to a large 3,500 strike at $6,500 in
December copper put options, which could drag on prices.
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    * SELLING: Traders noted consistent buying but one said it
was not sufficient to stop copper's selling momentum which was
in line with profit taking typically seen at year end. They are
also wary that further weakness could spark margin calls by a
large Shfe copper long.
    * NICKEL: Shanghai nickel closed down 3.9 percent,
tracking a 4.6-percent fall on the LME in the previous
session to the metal's lowest level in nearly two months, as
prices cracked below the 100-DMA, sparking more chart weakness. 
    * ZINC: ShFE zinc ended down 2.9 percent at 24,660
yuan a tonne amid a broad base metals selloff.
    * ALUMINIUM: ShFE aluminium was down 2.1 percent in
Shanghai, hurtling closer to the 14,000 yuan a tonne mark, and
has lost over 17 percent since Sept. 20 as winter production
cuts in China turned out to be less severe than expected. 
    
    METALS NEWS
    * COPPER: Indonesia said on Tuesday it planned to acquire
Rio Tinto's, stake in the Grasberg copper mine
operated by Freeport-McMoRan Inc, potentially solving a
drawn-out problem for all three parties. 
    * BATTERIES: Glencore has increased production of
metals used to make electric car batteries faster than its major
mining rivals, according to an industry-wide analysis.
       
    
    PRICES    
    
 BASE METALS PRICES                         0713 GMT
 Three month LME copper                         6547
 Most active ShFE copper                       51420
 Three month LME aluminium                      2042
 Most active ShFE aluminium                    14290
 Three month LME zinc                           3084
 Most active ShFE zinc                         24655
 Three month LME lead                         2476.5
 Most active ShFE lead                         18715
 Three month LME nickel                        10860
 Most active ShFE nickel                       88000
 Three month LME tin                           19430
 Most active ShFE tin                         140720
                                                    
 BASE METALS ARBITRAGE                              
 LME/SHFE COPPER              LMESHFCUc3      832.36
 LME/SHFE ALUMINIUM           LMESHFALc3    -1320.69
                                          
 LME/SHFE ZINC                LMESHFZNc3       268.8
 LME/SHFE LEAD                LMESHFPBc3    -1046.52
 LME/SHFE NICKEL              LMESHFNIc3     2923.92
                                          
 ($1 = 6.6143 Chinese yuan)

    
 (Reporting by Tom Daly; Editing by Amrutha Gayathri and Sunil
Nair)
  
 
 

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