RTRS: METALS-Copper falls to 6-month low on China slowdown fear
* Copper hits lowest since Dec. 20 at $7,264.25
* China May copper imports expected to drop
* Coming up; China industrial output for May on June 9
By Melanie Burton
LONDON, June 8 (Reuters) - Copper fell to its lowest since December on
Friday as investors' interpretation of China's surprise rate cut shifted from
its prospects for boosting demand to fears it could indicate a sharp slowdown in
the world's biggest metals consumer.
The metal, seen as a barometer of global economic health, is on track to
extend its losing streak to a sixth week, its longest such run in two years.
Three-month copper on the London Metal Exchange traded in official
rings at $7,270 a tonne on Friday. It earlier touched its lowest since Dec. 20
at $7,251.25 a tonne.
Copper initially rose on Thursday after China cut rates for the first time
since the depths of the financial crisis. On Friday the reaction turned to
worries that the cut could signal the impending release of poor economic data.
"China eased yesterday, which has set off more of a panic that the data
coming out at the weekend could be pretty grim Markets would like a coordinated
round of policy and cuts, but so far it is only China and it's more of a token
offering than anything else," analyst Robin Bhar of Societe Generale said.
"Markets haven't been thrown a lifeline, and the downtrends are still in
place. We could get a shot-covering bounce this afternoon, but we may be
$50-$100 lower by then."
Reuters polls published earlier in the week suggested the world's
second-largest economy probably showed signs of stabilising last month from a
surprisingly weak April, but now those expectations are in doubt.
Federal Reserve Chairman Ben Bernanke said on Thursday the U.S. central bank
was ready to shield the economy if financial troubles mount but offered few
hints that further monetary stimulus was imminent, disappointing the markets.
Adding to the bearish tone in Europe, German imports tumbled at their
fastest rate in two years in April and its exports fell more than expected,
indicating that Europe's largest economy is beginning to feel the chill from the
euro zone debt crisis.
Spain is expected to request European aid for its ailing banks at the
weekend to forestall worsening market turmoil, becoming the fourth and biggest
country to seek assistance since the euro zone's debt crisis began, EU and
German sources said.
CHINA MAY IMPORTS TO DROP
Data to be released over the weekend includes Chinese industrial production
for May as well as its trade data, which is expected to show a decline in copper
imports as unfavourable prices and high stockpiles erode demand.
China accounts for around 40 percent of refined copper consumption, although
as much as 80 percent of imports are not used immediately by industry but by
investors as collateral to secure cheaper loans.
"While we are looking for a technical rally going into the weekend, we would
stay calm as there remain many issues on the table which will serve to cap
prices in the medium term," RBC Capital said in a note.
Tin was at $19,500 in official rings from $19,950. A lack of nearby
supply has propelled cash prices to the loftiest in nearly two years against the
three months contract, trading at a premium of $80.
Zinc, used in galvanizing was at $1,878 from $1,909 on Thursday's
close while battery material lead was bid at $1,900 from $1,917, with
the price differential narrowing in recent days.
Aluminium traded in rings at $1973 from $1,992. It reached its
lowest since December at $1,965 on Thursday. Nickel traded at $16,405
from $16,595 a tonne recovering from 2.5 year lows near $16,000.
Metal Prices at 1210 GMT
Comex copper in cents/lb, LME prices in $/T and SHFE prices in
yuan/T
Metal Last Change Pct Move End 2011 Ytd Pct
move
COMEX Cu 327.30 -9.75 -2.89 344.75 -5.06
LME Alum 1972.25 -19.75 -0.99 2020.00 -2.36
LME Cu 7252.25 -242.75 -3.24 7600.00 -4.58
LME Lead 1893.25 -23.75 -1.24 2034.00 -6.92
LME Nickel 16392.00 -203.00 -1.22 18650.00 -12.11
LME Tin 19550.00 -400.00 -2.01 19200.00 1.82
LME Zinc 1876.50 -32.50 -1.70 1845.00 1.71
SHFE Alu 15875.00 -5.00 -0.03 15845.00 0.19
SHFE Cu* 53330.00 -620.00 -1.15 55360.00 -3.67
SHFE Zin 14685.00 -25.00 -0.17 14795.00 -0.74
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
