* China copper consumption still "anaemic"
* Seasonal metals demand rise expected in early autumn
* PT Timah stops selling tin on spot market as prices low
By Silvia Antonioli
LONDON, Aug 7 (Reuters) - Copper rose to a 1-week high on Tuesday as the
dollar softened and investors saw prospects for the EU to take new measures to
shore up its faltering economy, but slack metals demand in top consumer China
kept a lid on prices.
Markets have enjoyed a strong run after the European Central Bank (ECB)
promised to buy bonds to ease pressure on Spain and Italy, albeit under strict
conditions that are yet to be spelled out.
Expectations the ECB will act soon boosted the euro, which neared a
one-month high against the dollar.
A weaker U.S. currency makes dollar-priced commodities such as metals more
affordable more holder of other units.
Three-months copper on the London Metal Exchange was untraded in
official rings but was bid at $7,560 a tonne, up almost 1 percent from $7,495 at
the close on Monday.
Earlier it hit a session high of $7,598, its highest since July 31.
Prices however are still about 13 percent below the year's high hit in
February.
"We are sitting here and waiting for the eurozone to deliver something,"
said Andrey Kryuchenkov, analyst at VTB Capital.
"Markets are up on speculation that the ECB will make a move soon but copper
has been range-bound since the June sell-off and it is unlikely to move much
until you see the Chinese depleting their domestic warehouses. Chinese demand is
still anaemic at the moment."
Inventories of copper in China have risen dramatically since
the end of last year as the pace of growth there started to slow down, raising
worries about the metal consumption prospects.
China's copper stocks could start to come down in the early autumn, when
demand usually sees a seasonal increase and as the Chinese authorities will
probably implement more measures to boost the economy, according to VTB Capital.
SLUGGISH DEMAND
Two sources at smelters said China's copper smelters are planning to
increase refined copper exports following recent tax adjustments that have
reduced their export costs.
The move could shift thousands of tonnes of refined copper back to London
Metal Exchange warehouses and pressure global prices.
"This means the tax cost to smelters exporting cathode is now much lower, so
the price differential between the LME and the Shanghai Futures Exchange will
not have to be as large to incentivise exports," Barclays said in a note.
"This may be a limiting factor on the scale of the LME backwardation that
could re-emerge later in the year."
Reflecting still sluggish demand from end users in China, premiums for
physical metal have slipped, Citi noted in a report. "Chinese copper premia have
... come off, now at $65 a tonne having reached a high of $85 in early July," it
said.
China's economy is facing downward pressure from shrinking external demand
and a domestic property market downturn.
A string of economic data from China later this week should give some more
hints on the state of the world's second-largest economy.
Nickel traded at $15,725 a tonne in rings from $15,805 and tin
changed hands at $18,200 from $17,825.
Indonesia's PT Timah has stopped selling tin on the spot market
because of low market prices for the metal, cutting shipments this month from
the world's largest tin exporter.
Battery material lead traded at $1,908 from $1,891.
Zinc and aluminium, untraded in rings, were bid at $1,858
from a close of $1,849 on Monday and $1,898 from a last bid of $1,878,
respectively.
Metal Prices at 1212 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 343.40 4.50 +1.33 344.75 -0.39
LME Alum 1897.25 37.25 +2.00 2020.00 -6.08
LME Cu 7585.00 90.00 +1.20 7600.00 -0.20
LME Lead 1908.75 17.75 +0.94 2034.00 -6.16
LME Nickel 15749.00 -56.00 -0.35 18650.00 -15.55
LME Tin 18180.00 355.00 +1.99 19200.00 -5.31
LME Zinc 1861.25 12.25 +0.66 1845.00 0.88
SHFE Alu 15370.00 0.00 +0.00 15845.00 -3.00
SHFE Cu* 54860.00 250.00 +0.46 55360.00 -0.90
SHFE Zin 14610.00 -10.00 -0.07 14795.00 -1.25
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
