FRX: METALS-Copper falls; focus on dollar, equities
* Metals' momentum stalls; dlr, equities and inflation rule
* China metals demand surges, copper imports at new record
(Adds details, updates prices)
By Nick Trevethan
LONDON, July 22 (Reuters) - Industrial metals mostly fell on Wednesday, with copper off as much as 1 percent as upside momentum faded and investors refocused on external influences including the dollar and equities.
Copper for three-month delivery on the London Metal Exchange fell $39 to $5,361 in the second rings, while Shanghai's benchmark third-month copper futures contract closed at 42,980 yuan ($6,292) little changed on the day.
Earlier prices dipped to $5,338.
"In the past few days the upward momentum has dissipated. The dollar isn't doing much and there is not much economic data," said Leon Westgate, an analyst at Standard Bank.
"The market is looking to exogenous factors -- the dollar, equities and energy will continue to exert influence over the summer period. There are also some concerns in the market after Bernanke's comments and his handle on inflation," he said referring to testimony before the U.S. Congress from Fed Chairman Ben Bernanke.
Bernanke on Tuesday sought to dispel concerns the Fed's aggressive monetary easing could end up fuelling inflation.
Midsession floor dealing was low-key, dominated by spread trades. Cash to thre month copper traded at $15 contango, while Three-months to December 2009 was $5 contango.
World stock markets clung close to nine-month highs with some selling in Europe keeping a lid on further gains and the dollar was steady against major currencies.
BHP CAUTIOUS, CHINA SHINES
BHP Billiton, which reported a 21 percent fall in copper output in the latest quarter, said restocking of commodities in China may have come to an end, though North American markets may be starting to rebuild inventories.
But traders in Asia said that although restocking by China State Reserves Bureau, which is thought to have bought some 235,000 tonnes of copper this year may be over, imports would remain at comparatively high levels due to a shortage of scrap.
"Chinese fabricators are relying more heavily on refined metal for their feedstock as scrap supplies are fairly limited," a trader in the city-state of Singapore said.
"The tightness in scrap is unlikely to be relieved anytime soon, so we think although imports will probably be down from these record levels, they won't collapse."
Hopes for a pick-up in demand as the global economy recovers were underlined by a fifth straight month of record Chinese refined copper imports, up 12.4 percent from a month earlier.
In the first half of the year China has consumed 3.7 million tonnes of copper, up 48 percent from 2008, according to Reuters calculations.
"We now think demand will come in higher than previous expectations. Scrap tightness will support Chinese imports at comparatively high levels," a UK-based LME dealer said. "All the commodities are picking up -- oil is around $65 -- less impressive than the gains in metals and equities, but sentiment is driving these markets and expectations are more positive so prices are rising."
China also imported a record amount of nickel in June, at 41,008 tonnes, up nearly 64 percent from the previous month, official customs data showed.
Aluminium rose more than 1 perccent to $1,734 building on its 11 percent rise in the past two weeks.
The Singapore trader said that aluminium's longer term prospects were comparatively bright, despite record stockpiles and the potential for capacity restarts.
"A lot of the metal in storage now won't come out until the price is right, so it's more-or-less out of the market."
"Aluminium is highly geared to the the economic cycle and as demand recovers, available material in LME stores will come under pressure and result in higher prices -- at least until we hit levels that can thaw the financed metal glacier."
LME stocks of aluminium stand at a record 4.56 million tonnes -- enough to supply the world for six weeks.
Metal Prices at 1216 GMT Metal Last Change Percent Move End 2008 Ytd Percent
move COMEX Cu 243.20 -1.15 -0.47 139.50 74.34 LME Alum 1723.00 8.00 +0.47 1535.00 12.25 LME Cu 5355.00 -45.00 -0.83 3060.00 75.00 LME Lead 1667.00 -22.00 -1.30 999.00 66.87 LME Nickel 15875.00 -100.00 -0.63 11700.00 35.68 LME Tin 13750.00 -250.00 -1.79 10700.00 28.50 LME Zinc 1646.00 -21.00 -1.26 1208.00 36.26 SHFE Alu 13815.00 -20.00 -0.14 11540.00 19.71 SHFE Cu* 42980.00 -40.00 -0.09 23840.00 80.29 SHFE Zin 13715.00 0.00 +0.00 10120.00 35.52 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
