October 24, 2014 / 9:49 AM / in 6 years

METALS-Copper flat, Chinese house price weakness weighs on outlook

* Chinese house prices fall for fifth straight month
    * Shanghai zinc climbs on physical shortfall in China
    * Euro up against dollar

 (Updates with closing prices)
    By Eric Onstad
    LONDON, Oct 24 (Reuters) - Copper ended almost flat on
Friday, under pressure from a fifth straight month of decline in
Chinese house prices, with a rise in the euro against the dollar
limiting the metal's fall.
    Three-month copper on the London Metal Exchange 
closed at $6,690 a tonne, down 0.1 percent. 
    The fall in Chinese home prices in September wiped out gains
in the property market scored in the past year, raising
expectations the government will have to implement more economic
support measures to cushion the blow. 
    China's economy is likely to grow at its slowest pace in 24
years this year and will cool further in 2015, weighed down by a
cooling property sector and factory overcapacity and as top
leaders push structural reforms, a Reuters poll showed.
 
    "Anything on a short-term basis that indicates softness in
the Chinese property sector is going to be a concern, but I
wouldn't overplay one data point," said Nicholas Snowdon, metals
analyst at Standard Chartered.
    "It certainly remains an environment where there's this
tension between relatively constructive micro fundamentals for
base metals, versus concern about the macroeconomic picture."
    Helping to lift prices was a rise in the euro against the
dollar due to short-covering on euro positions ahead of the
weekend. 
    A weak dollar makes commodities priced in the U.S. unit
cheaper for holders of other currencies. 
    LME copper prices were set to advance by 0.9 percent for the
week in their biggest weekly rise since late August.    
    Chinese copper demand has improved slightly this month on
the back of orders from manufacturers before the Christmas and
Lunar New Year sales season, traders said. That, plus tentative
signs of economic growth, has provided some support to metals
prices.
    "We have had some positive drivers in the past few days.
Better-than-expected earnings in the United States, Germany's
PMI," said analyst James Glenn of National Australia Bank in
Melbourne.
    
    ALUMINIUM
    Among other metals, LME aluminium fell 1 percent to
close at $1,968 a tonne, trading below a one-month high of
$2,015.75 hit midweek. Prices have been supported by tight
supply after a swathe of capacity closures.
    "The aluminium market remains very tight. That's one where
people expect prices to be well supported going into next year,"
Snowdon said.
    LME cash aluminium traded at a $3.50 per tonne discount to
three-month prices CMAL0-3, against a discount of $32.50 at
the start of the month, indicating shortages of nearby material.
    "Reflecting nearby supply stress in aluminium, cash prices
are trading at their narrowest discount since late August
against three-month prices," Triland Metals said in a note. 
    LME zinc ended flat at $2,257 a tonne. 
    In China, physical zinc in China is trading at a high
premium over the Shanghai December contract "which probably
gives support to the assumption that supply is tight", an
analyst at a hedge fund in China said, adding that LME zinc
prices were still too high to encourage imports.
    Shanghai zinc stockpiles fell 4,090 tonnes to 143,206
tonnes, the lowest in five years, while the futures curve was
showing signs of stress, with cash prices having traded at a
premium against third-month prices for the past month.
ZN-STX-SGH
    Lead ended 1.7 percent lower at $1,995.50, tin
 was flat at $19,425 and nickel fell 0.9 percent
$15,005.  
   PRICES    
    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             
    

 (Additional reporting by Melanie Burton in Sydney; Editing by
Dale Hudson, Susan Thomas and David Evans)
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