RTRS:METALS-Copper falls on Europe anxiety, China GDP
* China Q3 GDP down to 9.1 pct; slightly lower than expected
* Freeport's Grasberg, Cerro Verde copper mines on strike
* Coming Up: U.S. PPI inflation, NSA, Sept; 1230 GMT
By Susan Thomas
Oct 18 (Reuters) - Copper fell on Tuesday after top metals consumer China's
economic growth data came in a touch lower than expected and on concerns about
its biggest trading partner Europe's festering debt problems.
Strikes at two Freeport-McMoran Copper & Gold mines, including one
of the world's largest copper mines in Indonesia, lent a little support.
China's economy grew 9.1 percent in the third quarter, its weakest pace
since early 2009, just below market forecasts, but this was offset by
better-than-expected industrial production and retail sales numbers for
September.
"The comment from Germany put metals on the defensive, and overnight the
market was disappointed by Chinese numbers. Although they weren't far away from
forecasts, it hasn't helped," BNP Paribas analyst Stephen Briggs said.
Germany warned on Monday a summit of EU leaders next Sunday would not
produce a miracle cure for the euro zone's sovereign debt crisis, quashing
expectations of a breakthrough.
Compounding Europe's problems, German analyst and investor sentiment fell in
October to its lowest level in nearly three years, a survey from the
Mannheim-based ZEW economic think tank showed, sending the euro to a session low
against the dollar.
The comments and data highlight the risks Beijing faces if trading partner
Europe does not resolve its debt problems, and the particular vulnerability of
base metals, used widely in construction and industry, to global economic
growth.
"Base metals are far more geared towards economic growth than other
commodity sectors. In good years they increase much more strongly and when the
economy is poor physical demand declines dramatically," Briggs said.
Three-month copper on the London Metal Exchange fell 2.9 percent to
$7,278 a tonne by 0924 GMT, after dropping 0.7 percent in the previous session.
Brent crude futures , by contrast, dipped 0.6 percent, to just under
$110.
WARNING
Zinc fell to its lowest in around two weeks, and was last down 2.5
percent at $1,858.25 per tonne from $1,903 at the close on Monday. The metal,
used to galvanize steel, is perceived to have the poorest fundamentals among
base metals.
Recent data from the International Lead and Zinc Study data shows the global
refined zinc market will have a 317,000 surplus this year and 135,000 tonnes
surplus next year.
A warning from rating agency Moody's that it may slap a negative outlook on
France's credit rating in the next three months also weighed on market
sentiment.
The euro fell and the dollar rose against a basket of currencies. A stronger
dollar makes commodities priced in the U.S. unit more expensive for holders of
other currencies.
"Expectations once again turned negative as clearly any solution for the
euro-zone debt issues will not be solved in the near term but be part of a
longer term package that member countries are desperately working toward," RBC
Capital Markets said in a note.
The worries about Europe neutralised any boost to copper prices from supply
disruptions.
Freeport halted production at its Grasberg mine in Indonesia on Monday
because of security fears and worker blockades, in the worst supply disruption
since a strike began a month ago. The company said that the main pipe carrying
copper concentrate to its port was cut.
In Peru, workers at Freeport's mine launched a hunger strike on Monday,
hoping to pressure the government to resolve a labour dispute 19 days into a
walkout at the Cerro Verde copper mine.
Aluminium fared best in the base metals complex, shedding 0.7
percent to $2,200.50 from a close of $2,217.
Tin fell 3.7 percent to $20,700 per tonne from $21,495, nickel was
$18,600 per tonne from $18,995, and lead lost 2.1 percent to $1,943 per tonne
from $1,986.
Metal Prices at 0927 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 329.90 -7.60 -2.25 444.70 -25.82
LME Alum 2197.50 -19.50 -0.88 2470.00 -11.03
LME Cu 7274.75 -220.25 -2.94 9600.00 -24.22
LME Lead 1940.25 -45.75 -2.30 2550.00 -23.91
LME Nickel 18603.00 -392.00 -2.06 24750.00 -24.84
LME Tin 20725.00 -770.00 -3.58 26900.00 -22.96
LME Zinc 1860.00 -43.00 -2.26 2454.00 -24.21
SHFE Alu 16355.00 -220.00 -1.33 16840.00 -2.88
SHFE Cu* 53680.00 -2150.00 -3.85 71850.00 -25.29
SHFE Zin 14515.00 -745.00 -4.88 19475.00 -25.47
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07