RTRS:METALS-Copper falls on demand concerns, China data
* China Feb new export orders fall, PMI still below 50 -HSBC
* Euro zone PMIs suggest region may slide back into recession
* COMING UP: U.S. existing home sales 1500 GMT
By Harpreet Bhal
LONDON, Feb 22 (Reuters) - Copper prices fell on Wednesday, reversing
the previous session's sharp gains, with confidence rattled by weak export data
from top consumer China and doubt over Greece's ability to implement tough
reforms aimed at cutting its debt.
Benchmark copper on the London Metal Exchange (LME) slipped 0.5
percent to $8,407.50 by 1007 GMT, from Tuesday's close of $8,449 a tonne.
Copper has gained more than 11 percent this year, partly buoyed by hopes
that demand from China - which consumes 40 percent of the world's copper - would
pick up after the Lunar New Year in January. But demand from the commodity
consuming giant has remained slack, raising worry prices could retreat sharply.
Highlighting those concerns were preliminary data showing China's new export
orders shrank in February, compared with expectations for a pick up after the
holidays and a worrying sign of the impact of the euro area debt crisis.
"Chinese companies have been slow to pick-up operations after the holidays
and there is a lack of physical demand. We need a more clear and positive steer
from the authorities as to where the demand is going to come from this year,"
said Nic Brown, head of commodity research at Natixis.
"Whether you look at export prospects for Chinese goods, or the car market
or the PMIs, it's not a pretty picture. And if against that backdrop you have
high and rising input costs this is terrible."
Adding to downbeat sentiment, the euro zone's service sector shrank
unexpectedly this month, reviving fears that the economy risks sinking into
recession, a business survey showed.
While Greece's 130-billion financing deal helped ease fears of an immediate
default, the country's economic outlook remained anything but rosy, a problem
that could yet derail its efforts to meet tough cost-cutting measures.
The dollar rose against the euro and a basket of currencies, adding pressure
to commodities, which are priced in the U.S. unit.
"The metals complex was a little overbought in January with many now
choosing to close these longs as evident from the open interest across the
board," VTB Capital analysts said in a note.
Goldman Sachs said it was lowering its 12-month commodity returns forecast
to 12 percent from 15 percent, citing that key commodities have rallied
substantially heading into 2012.
"However, these returns continue to justify an overweight allocation to
commodities relative to other assets in a standard portfolio," analysts at
Goldman Sachs said.
IMPORTS SEEN WEAK
Highlighting thin demand in China, copper stocks in Shanghai warehouses hit
their highest level in nearly a decade last week and analysts warned the
country's imports are likely to remain weak until March.
"Copper prices are likely to remain rangebound in the short term, before we
see any improvement in demand," said a Shanghai-based trader.
"But in the medium term, copper has a chance to break higher, with seasonal
demand picking up and liquidity in China increasing."
Aluminium was almost flat at $2,257 from Tuesday's close of $2,255 a
tonne.
Rio Tinto Alcan is asking Japanese buyers to increase the premium
they pay on primary aluminium shipments to $132 per tonne for the April-June
quarter, two sources involved in informal talks between the two sides said on
Wednesday.
Zinc was at $2,031.25 from Tuesday's close of $2,028 and lead
slipped to $2,104.50 from $2,117 a tonne.
Tin fell to $24,151 from Tuesday's close of $24,190 and nickel
was flat at $20,230.
Metal Prices at 0947 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2010 Ytd Pct
move
COMEX Cu 381.55 -2.10 -0.55 444.70 -14.20
LME Alum 2256.00 1.00 +0.04 2470.00 -8.66
LME Cu 8406.25 -42.75 -0.51 9600.00 -12.43
LME Lead 2105.00 -12.00 -0.57 2550.00 -17.45
LME Nickel 20230.00 0.00 +0.00 24750.00 -18.26
LME Tin 24050.00 -140.00 -0.58 26900.00 -10.59
LME Zinc 2029.00 1.00 +0.05 2454.00 -17.32
SHFE Alu 16250.00 70.00 +0.43 16840.00 -3.50
SHFE Cu* 60490.00 440.00 +0.73 71850.00 -15.81
SHFE Zin 15825.00 45.00 +0.29 19475.00 -18.74
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
