April 2, 2013 / 10:21 AM / in 5 years

METALS-Copper falls to seven-month low as weak data dampens mood

* LME nickel stocks rise to record high
    * Aluminium and lead hit five-month low
    * Traders see further downside in aluminium prices

    By Silvia Antonioli
    LONDON, April 2 (Reuters) - Copper fell 1 percent to a seven-month low on
Tuesday as downbeat manufacturing data from the euro zone, the United States and
China showed stuttering growth momentum in the top markets for metals.
    Benchmark copper on the London Metal Exchange (LME) closed  at $7,465 a
tonne, from $7,540 at Thursday's close, before the Easter long weekend. The LME
reopened on Tuesday.
    Earlier in the session the metal used in power and construction hit a
session low of $7,439 a tonne, its weakest since Aug. 21.
    March factory reports released on Monday pointed to weaker than forecast
expansion in the United States, while Chinese manufacturing activity failed to
show a strong revival in its pace of growth. 
    Adding to concerns about the fragile global economic recovery, manufacturing
across the euro zone fell deeper into decline in March, a business survey showed
on Tuesday.                                                     
    "I think we have seen relatively poor data in the past two days: the U.S.
data was disappointing, China PMI was up, but nothing too spectacular, and the
euro zone data was relatively poor, not surprisingly," Standard Chartered metals
analyst Daniel Smith said.
    "This subdued growth environment is not good for the metals complex."
    Deteriorating fundamentals are also weighing on metal prices: stocks of
copper in LME and ShFE inventories have swollen to near the highest in a decade,
while output from top producer Chile continues to grow.  
    Figures on Thursday showed Chile produced 420,207 tonnes of copper in
February, a 2.8 percent expansion from a year earlier, on improved ore grades
and higher output. 
    According to some, however, the recent steep decline in prices was overdone
and metals might pick up in the next few months.
    "In our opinion, the pessimism we have been observing for several weeks now
should provide a springboard for a sustained increase in the prices of copper
and other metals over the coming months, just as soon as market sentiment
shifts," Commerzbank said in a research note. 
    Stocks of stainless steel ingredient nickel in LME-registered warehouses rose by 1,296 tonnes to a record high of 166,716 tonnes, data
released on Tuesday showed.
    "Although for a lot of these markets LME stocks are often a misleading
(indicator) in a way, high nickel stocks certainly don't help," Smith said,
adding that he sees the metal trading in a range of $16,000-$19,000 a tonne this
year, but more often closer to the lower number.
     Nickel closed at $16,380 a tonne, from a close of $16,660 on Thursday,
after hitting its lowest since November at $16,244.
    Benchmark aluminium closed at $1,884 from $1,904 at Thursday's
close. Earlier, the metal slipped to $1,875 a tonne, its lowest since August
last year.
    The aluminium price looks vulnerable to further falls, given increasingly
bearish sentiment towards metals and a huge overhang of stock, traders said.
    Aluminium producers have posted heavy losses this year because of fragile
demand and excess supply.
    Aluminum Corp of China  (Chalco), for example, last
week posted a worse than expected net annual loss of 8.2 billion yuan ($1.3
billion), hit by low aluminium prices and rising costs. 
    In other metals, tin closed at $23,000 from $23,230 and zinc 
at $1,854 from $1,897 at Thursday's close.
     Lead closed at $2,050 from $2,112, after hitting a five-month low
at $2,050 a tonne.
 Metal Prices at 1710 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
  COMEX Cu       337.45        0.00     +0.00     365.25     -7.61
  LME Alum      1886.50      -17.50     -0.92    2073.00     -9.00
  LME Cu        7471.50      -68.50     -0.91    7931.00     -5.79
  LME Lead      2058.50      -53.50     -2.53    2330.00    -11.65
  LME Nickel   16370.00     -290.00     -1.74   17060.00     -4.04
  LME Tin      22956.00     -274.00     -1.18   23400.00     -1.90
  LME Zinc      1858.25      -38.75     -2.04    2080.00    -10.66
  SHFE Alu     14605.00       60.00     +0.41   15435.00     -5.38
  SHFE Cu*     54500.00      390.00     +0.72   57690.00     -5.53
  SHFE Zin     14685.00       45.00     +0.31   15625.00     -6.02
 ** 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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