METALS-Copper slips on uncertainty over Chinese demand
* China central bank assurance fails to calm jitters
* Aluminium stocks hit another record on LME
* Lower price levels boosts buyers' hedging activity
LONDON, June 26 (Reuters) - Copper slipped on Wednesday on concerns about the outlook for demand from top consumer China as moves by the country's central bank to ease fears of a credit crunch failed to fully reassure investors. Also hitting sentiment were growing expectations that improving U.S. economic conditions could prompt the Federal Reserve to rein in its stimulus programme, which has helped commodities. Such concerns were only partially offset by comments from Mario Draghi, president of the European Central Bank, who reiterated on Wednesday that an ECB exit from its loose monetary policy remains distant.
Benchmark three-month copper on the London Metal Exchange stood at $6,772 per tonne by 1427 GMT, down 0.3 percent from Tuesday's close of $6,805. Copper, used in power and construction, fell almost 4 percent last week, its biggest weekly drop since mid April, and has already shed 1.5 percent this week. "The potential scaling back of stimulus measures (by the U.S. Fed) and discouraging signs out of China have been a drag on metals prices across the board," said Ross Strachan, economist at Capital Economics. "Looking at fundamentals it would suggest that there is further downside for copper. We expect prices to fall below $6,000 a tonne next year due to additional mine supply and the weak state of demand." Demand from China accounts for around 40 percent of global copper consumption. The People's Bank of China (PBOC) said late on Tuesday it had provided cash to some institutions facing temporary shortages and would continue to do so if needed. Copper hit a three-year low early this week, pressured by worries that China's central bank was engineering a tightening of cash in a bid to rein in excessive credit growth. That steep fall was mainly driven by financial investors opening short positions but the lower prices are now attracting more industrial buyers, according to Commerzbank. "The price fall was exaggerated so some market players see these lower price as a long-term buying opportunity. Hedging activity has clearly increased in the last few days as these lower prices are attractive," said Commerzbank analyst Daniel Briesemann. "Below 7,000 we see a stronger increase in buying interest so copper may still be able to rise quite markedly by the end of the year." In other metals, aluminium traded at $1,779.80 a tonne, from Tuesday's close of $1,784. Aluminium stocks in London Metal Exchange warehouses hit a fresh record high of 5.448 million tonnes, data showed.
Metal Prices at 1438 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
Metal Last Change Pct Move End 2012 Ytd Pct
COMEX Cu 3.06 -0.02 -0.57 365.25 -99.16 LME Alum 1778.50 -5.50 -0.31 2073.00 -14.21 LME Cu 6755.25 -49.75 -0.73 7931.00 -14.82 LME Lead 2036.00 -19.00 -0.92 2330.00 -12.62 LME Nickel 13620.00 -310.00 -2.23 17060.00 -20.16 LME Tin 19750.00 -125.00 -0.63 23400.00 -15.60 LME Zinc 1839.25 -9.25 -0.50 2080.00 -11.57 SHFE Alu 14230.00 -35.00 -0.25 15435.00 -7.81 SHFE Cu* 48270.00 -210.00 -0.43 57690.00 -16.33 SHFE Zin 14315.00 -10.00 -0.07 15625.00 -8.38 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07