METALS-London copper starts Dec on weak footing as supplies swell

Melanie Burton
Sunday, 1 Dec 2013 | 11:08 PM ET

* China HSBC Nov final manufacturing PMI at 50.8

* Aluminium consumers wait for lower prices - Triland

* Coming up: Euro zone Markit Mfg PMI at 0858 GMT

(Adds comment, detail; updates prices)

SINGAPORE, Dec 2 (Reuters) - London copper started December on a soft footing after last month logging its biggest monthly loss since June, as expectations for a swelling market surplus next year eclipsed improving factory growth in top consumer China.

Copper prices plumbed three month lows last month, dogged by expectations growing mine production would widen a market surplus into next year. But in the near term, a shortfall in refined metal and steady demand from China has lent a floor to prices, suggesting copper will remain range-bound for now.

"The data broadly says that things are stabilising in China and there's probably less downside risk to prices," said Thomas Lam, chief economist at DMG & Partners Securities in Singapore.

"But I don't think it foreshadows significant pick up from here into next year," he said.

Three-month copper on the London Metal Exchange was trading at $7,028.50 a tonne by 0325 GMT, down 0.38 percent after a half-percent gain the previous session. Copper lost 2.7 percent in November.

The most-traded February copper contract on the Shanghai Futures Exchange traded little changed on Monday at 50,570 yuan ($8,300) a tonne.

China's factory activity maintained steady growth momentum in November, boosted by resilient new orders, though the pace of expansion eased slightly from October, a private survey showed on Monday.

"It's follow through of the same story of the last few weeks, dollar strength, market still trying to weigh up real demand," a Hong Kong-based trader said, adding that traders could be cutting long positions as rallies have failed to gain steam.

Hedge funds and money managers increased copper's net short bets in futures and options for the week ended Nov. 19, a report by the Commodity Futures Trading Commission showed on Friday.

Mine output of copper has grown by around 944,000 tonnes year to date, almost twice the pace of primary refined production, which is up by 525,000 tonnes, fuelling an increase in copper concentrate stocks, Barclays said in a note.

A rush of key economic releases this week and the European Central Bank's last meeting of the year may help set the tone for investors and traders looking ahead to 2014.

In news, a worker was killed after an incident in an underground section of Freeport McMoRan Copper and Gold Inc's Grasberg copper mine in Indonesia, the company said. It was not clear if production was affected.

Among other metals, consumer buying interest has not picked up in aluminium, despite lower prices, broker Triland Metals said in a note on Friday.

"General sentiment among this group seems to be that ... they will pick up metal at lower prices in coming weeks."

Aluminium prices hit a four year low of $1,741.25 a tonne on Friday.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Three month LME tin ($1 = 6.0932 Chinese yuan)

(Reporting by Melanie Burton; Editing by Joseph Radford)