May 29, 2015 / 10:28 AM / 5 years ago

METALS-Aluminium sees biggest monthly loss in 2-1/2 years on supply glut

* China nickel premiums firm on prospect ShFE lists global brands

* SMM says considering whether to list on ShFE, no action taken

* China easing measures seen supporting demand in H2 -analyst (Updates with closing prices)

By Eric Onstad

LONDON, May 29 (Reuters) - Aluminium prices slid on Friday on continued worries about output from China swamping the global market, notching its biggest monthly decline in more than 2-1/2 years.

Three-month aluminium on the London Metal Exchange failed to trade in closing open outcry activity and was last bid down 2 percent at $1,740 a tonne after gaining 2.2 percent on Thursday.

Aluminium suffered losses of 9.6 percent in May, the biggest monthly drop since October 2012, as data showed Chinese output rose to 2.59 million tonnes in April.

“I definitely see more downside risks than upside potential for aluminium because of the supply glut,” said Daniel Briesemann, analyst at Commerzbank in Frankfurt.

“Looking at the technical side, I wouldn’t be surprised to see the price to drop to $1,700, and it would be very interesting if it crashes through this level.”

LME copper ended 1.3 percent down at $6,015 a tonne after closing a touch firmer in the previous session. Prices chalked up their first monthly loss in four, of nearly 5 percent.

Copper has been pressured by ample inventories of refined metal, but prospects that Chinese stimulus measures would revive demand has kept a floor under prices.

“We’ve seen positive trends in the imports for copper and it certainly feels like monetary easing is helping trade financing activities, which should be supportive of copper imports in the shorter term,” said Daniel Hynes, analyst at ANZ in Sydney.

Chinese factories struggled to expand in May despite recent interest rate cuts and other policy stimulus, a Reuters poll showed. The data is due on Monday.

LME copper stocks have turned down since mid-May MCUSTX-TOTAL, while ShFE copper stocks have dropped by about 60,000 tonnes since mid-April. But physical copper traders say there is plenty of metal held in off-exchange inventory. Output at top refined producer China was up 12 percent year to date in April.

LME nickel closed 1.4 percent lower at $12,635 a tonne, posting a monthly loss of nearly 10 percent after lacklustre stainless steel demand in China and a new ShFE contract opened the doors to fresh short sellers.

However, premiums for metal held in China’s bonded zones climbed $7.50 this week to $150-$260 on prospects that global brands would be accepted by the ShFE for delivery, traders said.

A spokesman for nickel producer Sumitomo Metal Mining said the company was watching how the market develops and considering whether to register its brands with ShFE, but it had not yet taken any action.

Lead ended 2 percent weaker at $1,950 a tonne while sister metal zinc shed 1.8 percent to finish at $2,188.

Tin was the only metal ending in positive territory, edging 0.2 percent higher at $15,600 a tonne.


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 (Additional reporting by Melanie Burton in Melbourne and Yuka Obayashi in Tokyo; Editing by Alison Williams and David Goodman)

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