June 19, 2015 / 10:23 AM / 5 years ago

METALS-Aluminium falls to 16-month low, copper weakest since March

* Firmer dollar weighs on metals across the board

* Tumble in Chinese shares may have had impact on metals

* Copper premiums drop $5 this week, physical demand tepid (Updates with closing prices)

By Eric Onstad

LONDON, June 19 (Reuters) - Aluminium dropped to its lowest level in more than 16 months on Friday while copper touched its weakest since March on a firmer dollar, worries about demand in top metals consumer China and uncertainty over Greek debt talks.

Zinc and lead also slid to three-month troughs in a broad-based lurch lower on the London Metal Exchange as speculators piled on the pressure.

“We remain in a very fragile price environment, reflecting the very low visibility on Chinese demand conditions,” Nicholas Snowdon, metals analyst at Standard Chartered in London, said.

An expected seasonal revival in demand has failed to occur in China, which accounts for more than 40 percent of global copper consumption.

“So in the absence of a more positive (demand) trend, pressure will remain on the base metals complex,” Snowdon said.

Three-month copper on the LME closed 1.7 percent lower at $5,659 a tonne, its lowest since March 18. Prices ended the week down more than 4 percent, a fifth straight weekly drop.

Traders said there had been light consumer buying from China as copper prices fell, but physical premiums for metal in Shanghai’s bonded zone slipped another $5 this week to $60, illustrating tepid demand as factories wind down over summer.

A slightly firmer dollar also weighed on the metals market, making it more expensive for buyers outside the United States to purchase commodities priced in the U.S. currency.

A tumble in Chinese stocks may have also had an impact on metals during Asian trading, said analyst Edward Meir at broker INTL FCStone.

“We wonder if some of the selling in stocks could be having a knock-on effect on metals, as investors seek to raise cash to support margin leverage,” he said in a note. “We are also quite concerned about Monday’s opening for the Chinese stock market.”

Also pressuring the market were worries about Greece after talks over a new debt deal broke down on Thursday.

LME aluminium fell 0.6 percent to end at $1,691.50 a tonne, the lowest since early February 2014. The drop, together with the collapse in global premiums, is expected to ramp up pressure on producers.

Tin edged 0.1 percent lower to finish at $15,395 a tonne following a more than 4 percent jump on Thursday fuelled by technical buying after prices broke resistance at $15,000 a tonne, a trader said.

Zinc closed down 1 percent at $2,046 a tonne, lead ended 1.2 percent weaker at $1,785 while nickel dipped 0.1 percent to $12,710.


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; Editing by Mark Heinrich and Susan Fenton)

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