December 16, 2014 / 10:54 AM / 5 years ago

METALS-Weak Chinese data sends aluminium to two-month low

* Aluminium, copper prices dented by Chinese data

* LME lead prices near 19 month lows

* Falling crude oil prices to erode metals output costs, prices (Adds details, quotes)

By Eric Onstad

LONDON, Dec 16 (Reuters) - Aluminium prices hit their lowest level in two months on Tuesday, while copper also slid after poor industrial data from China, the world’s biggest metals consumer, and a further fall in oil prices.

Activity in China’s factory sector contracted in December for the first time in seven months, the latest in a string of weak economic indicators.

Broader market sentiment was soured as Brent oil futures sank towards $59 per barrel for the first time since May 2009, while Russia’s central bank raised its key interest rate to 17 percent in an attempt to stabilise the rouble.

“The Chinese data were quite bad and the whole series of weak data that we’ve got over the past few weeks points to lower prices going forward,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.

“I’m surprised that prices aren’t lower. I think that’s because there’s still expectation that the Chinese government will introduce further stimulus measures to prevent a sharp drop in the economy.”

Three-month aluminium on the London Metal Exchange was down 0.5 percent at $1,913 per tonne by 1018 GMT, having earlier hit two month low at $1,909.50.

Copper dropped to its lowest since Dec. 2 at $6,328, adding to a 1.4 percent loss from the previous session, before paring losses to $6,361, down 0.6 percent.

“On the demand side, China is still positioning for a deceleration,” said analyst Dominic Schnider of UBS Wealth Management in Singapore.

“(On falling oil) people underestimate that the cost curve comes down and people should take that into consideration next year. Supply can be stronger than people think. That means on net-net basis I still have difficulties seeing copper rising.”

The prospect of oversupply next year was continuing to haunt the copper market.

China’s production of refined copper rose 3.1 percent from the previous month in November, hitting a record for the fourth straight month as high processing fees prompted smelters to produce more metal.

Traders will also be watching the U.S. Federal Open Market Committee which starts a two-day monetary policy meeting for any new indications on the timeline for which it may raise interest rates.

In other metals, LME lead struck its lowest in more than a year at $1950.50. Lead has been weighed by falling growth in electric bike sales in China, and high finished stocks of batteries, a trader at a hedge fund said. (Additional reporting by Melanie Burton in Sydney, Veronica Brown in London; Editing by Greg Mahlich)

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