(Adds closing prices)
* Aluminium’s contango widens
* Copper stocks offer some hope for demand
By Pratima Desai
LONDON, May 18 (Reuters) - Copper slipped as the dollar rose on Monday, though losses were limited by signs of potentially stronger demand and expectations of further policy easing by top consumer China.
Benchmark copper on the London Metal Exchange closed down at $6,380 a tonne from $6,415 at Friday’s close.
The higher U.S. currency makes dollar-denominated commodities more expensive for holders of other currencies.
“It’s a softer start to the week. The stronger dollar is weighing on base metals, which are ignoring the oil price rise,” Danske Bank analyst Jens Pederson said.
A rising oil price has supported industrial metals in recent days because it increases the energy costs of metal production.
China, meanwhile, is being watched closely for stimulus measures in addition to the central bank’s recent interest rate cut and a reduction in the amount banks must hold as cash in an attempt to spur lending.
Analysts are also watching stocks of copper in exchange warehouses.
“After subtracting cancelled warrants to account for available LME stocks, the decline mirrors that of SHFE stocks, Barclays said in a note.
Stocks of copper in LME-approved warehouses stand at 337,775 tonnes, 37.3 percent of which is earmarked for delivery. Inventories in warehouses monitored by the Shanghai Futures Exchange, at 173,157 tonnes, have tumbled by about 30 percent since early April.
“Both ... support the argument that while global demand could possibly remain flat year on year, it is looking increasingly unlikely that total demand has contracted relative to last year, a worry held by some at the beginning of the year, Barclays said.
Three-month aluminium, under pressure from growing supplies, ended lower at $1,820 from $1,853 on Friday. It hit $1,817 earlier on Monday, the lowest since April 24.
Current prices are below the costs incurred by some producers outside China and could persuade them to cut capacity.
Ample supplies of aluminium can be seen in the contango, or discount, of $36 a tonne for the cash contract over the three-month futures.
Zinc fell to $2,281 from Friday’s close of $2,291, while lead slid to $1,966 from $1,977. Tin was untraded at the close, but bid at $15,875 from $15,775.
Nickel traded lower at $13,750, down from Friday’s last bid at $13,960.
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
Most active ShFE nickel
Three month LME tin
Most active ShFE tin (Editing by David Goodman and David Evans)