RTRS:METALS-Copper eases after China loans data; inflation eyed
* Weak China lending data worries, but money supply cuts
risks of rate hike
* Chinese industrial output, CPI and U.S. PPI numbers on
Tuesday
* Spot copper demand strong in China, futures falter
(Updates prices, adds quotes and details)
By Carrie Ho
SHANGHAI, June 13 (Reuters) - London copper fell by a third
of a percent on Monday, after a slowdown in Chinese lending in
May, illustrating the efficacy of Beijing's monetary tightening
and accompanying risks to demand.
Chinese banks made loans of 551.6 billion yuan in local
currency in May, missing market forecasts for 610 billion yuan,
the People's Bank of China said.
Annual growth in China's broad M2 measure of money supply
edged down to 15.1 percent in the month from April's 15.3
percent. The median forecast of economists was for a 17.1
percent rise in outstanding loans and a 15.4 percent increase in
M2.
Three-month copper on the London Metal Exchange fell
0.3 percent to $8,910 at a tonne by 0551 GMT. Earlier copper
dipped as low as $8,889.25, its weakest since May 25.
"The lower-than-expected loan data last month indicates that
the central bank is maintaining its monetary stance and
tightening steps are working well," said Qiu Jihua, analyst,
Sealand Securities.
"Meanwhile, M2 also dipped, which means the room for further
rises in interest rates or reserve requirements is smaller.
Inflation is not the only factor the central bank takes into
account when considering whether to raise interest rates or not.
Although inflation is still quickening, the government must also
stay vigilant on downside risks to the economy, including the
risk of a hard landing."
In spite of the reduced risk of additional Chinese
tightening, investors were cautiously pessimistic ahead of
Tuesday's release of Chinese industrial output and consumer
price index data and U.S. inflation numbers.
The most-active August copper contract on the Shanghai
Futures Exchange SCFcv1 fell 1 percent to 66,950 yuan per
tonne, chasing the previous session's losses on the LME of more
than 1 percent, but maintaining the premium for benchmark London
copper versus Shanghai around 600 yuan.
Prompt prices in Shanghai held their premium to the third
month -- currently around 1,100 yuan, potentially encouraging
some metal to enter China from the international market after
disappointing imports in May.
"The continued backwardation in SHFE copper shows that
investors are buying copper for prompt delivery but are wary
about taking long positions," said Shanghai CIFCO Futures
analyst Zhou Jie.
"The August contract price is falling as people are still
anticipating an interest rate hike in China in the near term,"
he added.
Lending some support to copper prices was the continued
supply disruption at Chile's El Teniente mine.
Output at the world's No. 5 copper deposit remained well
below capacity on Sunday, as staffing was limited by renewed
violence from striking contractors, mine owner Codelco said.
London lead prices fell 1.4 percent and the Shanghai
equivalent SPBc3 also lost ground after news that lead
pollution in eastern China seriously poisoned 103 children and
affected hundreds of other residents.
This may prompt more efforts by the Chinese government to
crack down on heavy metal polluters among industries such as
lead consumers.
In industry news, commodities trader Glencore
is considering making a 12 billion pound ($19.5
billion) takeover bid for ENRC , the Kazakh miner hit by
a bitter boardroom battle, the Sunday Times reported.
ENRC produces copper, alumina, aluminium and ferroalloys,
among other commodities.
Base metals prices at 0551 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8910.00 -28.00 -0.31 -7.19
SHFE CU FUT AUG1 66950 -640 -0.95 -6.82
LME Alum 2599.00 -20.00 -0.76 5.22
SHFE AL FUT AUG1 17075 -60 -0.35 1.40
HG COPPER JUL1 403.30 -5.15 -0.57 -9.16
LME Zinc 2249.25 -10.75 -0.48 -8.34
SHFE ZN FUT AUG1 17385 -155 -0.88 -10.73
LME Nickel 22600.00 -250.00 -1.09 -8.69
LME Lead 2510.00 -35.00 -1.38 -1.57
SHFE PB FUT SEP1 16930 -140 -0.82 -7.74
LME Tin 25485.00 85.00 +0.33 -5.26
LME/Shanghai arb 664
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third
month
