September 14, 2017 / 11:34 AM / 10 months ago

METALS-Copper slides on lacklustre China data

* LME/SfHE arb: (Adds closing prices)

By Zandi Shabalala

LONDON, Sept 14 (Reuters) - Copper fell to a four-week low on Thursday after some weaker than expected data from China pointed to slowing demand from the metal’s top consumer.

Benchmark copper fell 0.7 percent to $6,498 per tonne, after earlier touching its lowest since Aug. 18. Copper has fallen 7 percent from its September high.

“Softness in Chinese data has been a bit of an issue and I would chalk today’s fall in copper down to that,” said ETF Securities commodity strategist Nitesh Shah.

“From a fundamental perspective, the price of copper should be high, but the pace at which the rally has taken place is surprising,” he said.

Copper surged 28 percent from its May low to its 2017 peak of $6,970 hit on Sept. 5 on expectations of strong demand from China and a softer U.S. dollar.

CHINA DATA: Data showed slower than expected growth in investment, factory output and retail sales but a rebound in property sales and construction starts is likely to keep China’s overall growth relatively robust and on target.

“We had expected momentum to carry the Chinese economy for at least a month longer, given the strong PMIs and recent price action in commodities (implying at least speculation of growing demand),” said Liberum analyst Ben Davis.

COPPER STOCKS: On-warrant LME inventories - those not earmarked for delivery - rose 26,000 tonnes to 186,125 tonne and are up 67 percent from a September low touched last week.

DISCOUNT: The discount or contango for the cash copper contract to the three-month forward on the London Metal Exchange jumped to over $40 a tonne MCU0-3, an eight-year high. Traders said this pointed to more metal being delivered in coming days.

NICKEL DISCOUNT: The nickel contango MNI0-3 hit a three-year high above $80 a tonne.

CHINA OUTPUT: China’s non-ferrous metal output - which includes copper, aluminium, lead, zinc and nickel - fell to a one-year low in August in a sign that Beijing’s environmental crackdown is curbing supplies of base metals.

LEAD DEMAND: Demand for lead in China, the world’s largest consumer, comes chiefly from vehicle battery makers. However, lead output has declined because of environmental investigations that have shut down smelters operating illegally.

ALUMINIUM: Some Japanese aluminium buyers have agreed to pay a global producer a premium of $95 per tonne for shipments in the fourth quarter, reflecting lower spot premiums, two sources involved in the pricing talks said on Thursday.

PRICES: Aluminium closed down 0.6 percent at $2,098 a tonne, zinc shed 0.6 percent to $3,005, lead added 0.7 percent to $2,307, tin inched up 0.1 percent to $20,525 and nickel slipped 1.4 percent to $11,200.

Additional reporting by James Regan; Editing by David Clarke and Mark Potter

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