June 5, 2015 / 4:10 AM / 5 years ago

METALS-Copper faces third weekly loss as demand set to ebb

* Hold existing long positions in nickel, don’t rush to add -BNP

* ShFE copper finding support at 100-day moving average

* Coming up: Germany industrial orders at 0600 GMT (Adds comment, detail; updates prices)

By Melanie Burton

MELBOURNE, June 5 (Reuters) - London copper fell to a six-week low and was set to rack up its third-straight weekly loss on Friday on expectations of a summer slowdown, while nickel was due to log the biggest climb among base metals as traders bet on dwindling ore stocks.

Trade was subdued ahead of U.S. nonfarm payroll data that may spark fresh dollar direction. U.S. job growth was likely solid in May and wages probably picked up a bit, suggesting sufficient momentum in the economy for the Federal Reserve to raise interest rates later this year.

“The dollar is rising, demand is seasonally slower, so there are some headwinds to prices in the coming months,” said Joel Crane of Morgan Stanley in Melbourne. Morgan Stanley forecasts copper averaging $5,952 a tonne in the third quarter.

London Metal Exchange copper fell to $5,885 a tonne, its weakest since April 23, before paring losses to $5,913 a tonne by 0751 GMT, down 0.1 percent. Prices were on track for a 1.7-percent weekly fall in a worsening chart picture.

Shanghai copper dropped 1.6 percent to 42,810 yuan ($6,900)a tonne. Support was seen at the 100-day moving average at 42,744 yuan, a break of which could spark momentum sales.

Across other metals, LME nickel was set to close the week up 2.1 percent on expectations that China would turn to refined nickel as its ore stockpiles drop.

“Firmer-than-expected NPI production and weak nickel demand have delayed the market’s shift into deficit,” said BNP Paribas in a note. Nickel pig iron (NPI) is a cheaper source of feed than nickel, used by China’s vast stainless steel sector.

“We still expect a large deficit in 2016, but it will take longer to run down excess inventories.”

The bank issued a trading recommendation to retain existing long positions on a risk-reward basis, but said there was no hurry to initiate fresh longs.

U.S. nonfarm productivity fell more sharply than initially thought in the first quarter, leading to a jump in labour-related production costs, a trend that could ignite inflation if sustained.

A deluge of Chinese data due next week may show some signs of steadying in the world’s second-largest economy thanks to stimulus measures, but analysts say more support is needed to counter headwinds from a property downturn and patchy exports.


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

$1 = 6.2042 Chinese yuan renminbi Reporting by Melanie Burton; Editing by Joseph Radford

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