RTRS:METALS-LME copper slips, China cuts growth outlook
* China targets 2012 GDP growth of 7.5 pct
* LME copper losses capped by hopes of seasonal demand
* HSBC China services PMI at 4-month high
* Coming Up: US non-manufacturing PMI, 1500 GMT
(Recasts, adds details, updates prices)
By Manolo Serapio Jr
SINGAPORE, March 5 (Reuters) - London copper gave up
early gains to trade lower on Monday after top copper consumer
China shaved its economic growth outlook for this year, although
hopes of a seasonal pickup in consumption helped limit losses.
Copper has risen nearly 13 percent this year, buttressed,
along with other commodities, by increased liquidity across
markets as countries opt to ease their monetary policy to spur
growth.
Chinese Premier Wen Jiabao cut his nation's growth target to
7.5 percent for 2012, from the 8 percent set in the previous
eight years, to give the economy room to slow if needed while
the government carries out promised economic and welfare reforms
ahead of a looming leadership transition.
"We aim to promote steady and robust economic development,
keep prices stable, and guard against financial risks by keeping
the total money and credit supply at an appropriate level, and
taking a cautious and flexible approach," Wen said in his annual
work report to the National People's Congress.
But analysts were optimistic that rising copper stockpiles
in China, which hit a near 10-year peak last week, suggest
importers are positioning themselves for a recovery in demand
rather an indication of sluggish consumption.
"We don't see further big increases in Shanghai copper
stocks because we're now coming into peak consumption season in
China," said Matt Fusarelli, analyst at AME Group.
"We expect to see a bit more restocking and a lot of this
material moving from Shanghai warehouses to consumers."
Three-month copper on the London Metal Exchange
dropped 0.3 percent to $8,552.25 a tonne by 0711 GMT.
The most-traded May copper contract on the Shanghai Futures
Exchange slipped half a percent to 61,010 yuan ($9,700)
a tonne.
LME copper slipped on Friday after data showed copper
inventories in warehouses monitored by the Shanghai Futures
Exchange rose to 221,487 tonnes, the highest since August 2002
CU-STX-SGH.
In contrast, copper stocks in LME warehouses stand at
289,000 tonnes, the lowest since August 2009 MCU-STOCKS.
CYCLICAL TREND
Some traders saw the excess metal in Shanghai as a sign of
weak Chinese demand, although the modest 0.6 percent price drop
on Friday suggested many investors were not rattled by the data.
"Since 2010, we can see a seeming cyclical trend in copper
stocks at the SHFE, with peaks occurring during the March-April
period," Commonwealth Bank of Australia said in a note.
"The limited cyclical pattern raises the question whether
the recent stock rise reflects lower Chinese sentiment towards
the metal or careful planning by Chinese enterprises of future
copper sentiment.
"With Chinese economic policy and initiatives still unclear
for 2012, it appears a little early to anticipate Chinese
sentiment towards copper and other industrial metals," the bank
said.
AME's Fusarelli said he remains bullish on copper,
predicting the price will top $8,800 in the second and third
quarters.
"We see structural tightness in the market, we see improving
consumption not only in China but also in the West. The United
States will add to copper demand and we see stabilisation in
Europe," he said.
Recent data have showcased improvements in the U.S. housing
and labour markets, spurring expectations of increased U.S.
copper demand.
The Chinese economy has also been showing signs of recovery.
China's services sector ran at its fastest pace in four months
in February, although well below its long-term trend despite an
uptick in new business growth to an eight-month high, according
to HSBC's survey of purchasing managers.
Also boding well for copper demand, Chinese banks have
started offering preferential loan rates for first-home buyers,
the official China Securities Journal reported, signalling that
Beijing is relaxing its grip on the property sector, a key
copper user, after a near two-year clampdown.
Jiangxi Copper , China's top copper
producer, expects domestic demand to rise about 7 percent this
year.
Base metals prices at 0711 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8552.25 -27.75 -0.32 12.53
SHFE CU FUT MAY2 61010 -320 -0.52 10.21
HG COPPER MAY2 389.30 -1.00 -0.26 13.30
LME Alum 2311.25 -16.75 -0.72 14.42
SHFE AL FUT MAY2 16235 -35 -0.22 2.46
LME Zinc 2109.25 -9.75 -0.46 14.32
SHFE ZN FUT MAY2 16020 -55 -0.34 8.28
LME Nickel 19386.00 -64.00 -0.33 3.61
LME Lead 2180.00 -3.00 -0.14 7.13
SHFE PB FUT 16130.00 -80.00 -0.49 5.53
LME Tin 23750.00 25.00 +0.11 23.70
LME/Shanghai arb^ 2073
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
