July 8, 2015 / 2:31 AM / 5 years ago

METALS-LME, ShFE copper sag to 6-year lows as China worries mount

* ShFE nickel slides by daily limit-down of 5 pct
    * Copper is oversold, but room for more bearish bets -trader
    * Coming up: U.S. consumer credit for May at 1900 GMT

 (Adds comment, detail, updates prices)
    By Melanie Burton
    MELBOURNE, July 8 (Reuters) - Copper in London and Shanghai
jolted to new six-year lows on Wednesday after a stock market
crash in China smacked other markets and fanned worries that
Beijing may be losing its grip on economic growth.
    Chinese stocks plunged after the country's securities
regulator warned investors were in the grip of "panic sentiment"
and the market showed signs of freezing up as firms scrambled to
escape the rout by having their shares suspended.
 
    China's interest rate cut that failed to stem falling
equities prices has reduced confidence in the country's economic
growth, clouding the outlook for metals consumption, said
Jonathan Barratt, chief investment officer at Sydney's Ayers
Alliance.
    "The move is not just about what is happening in Shanghai,
it's about confidence in the general global economy," he said.
    "But I don't think it's as bad as it looks. The U.S. economy
will continue to show signs of improvement, which should help
commodities find support, and we'll see a bottom in place soon."
    Sentiment has already been damaged by worries about Greece.
Euro zone members have given the country until the end of the
week to make a proposal for reforms in return for loans that
will keep it from crashing out of Europe's currency bloc.
 
    Three-month copper on the London Metal Exchange 
skidded to $5,240 a tonne, its weakest since July 2009, before
springing back to $5,344 and was unchanged by 0731 GMT. It
tumbled 4.5 percent in the previous session.
    Shanghai Futures Exchange copper notched up a 5.7
percent loss, having also struck a six-year low. 
    Other ShFE contracts fell between 3.5 and 5 percent, with
aluminium striking a new 10-year trough.
   "Sentiment is reflecting a bearish fundamental outlook for
China's second half on consumption," said a merchant source in
Shanghai. 
    "It's definitely oversold, but the overall open interest
across Shanghai metals is still fairly low, meaning that
speculators may still have more bullets to deploy." 
    Still, a fragile supply side was likely to support copper
prices going into year-end, said Argonaut Securities.
    The world No. 1 copper exporter, Chile, slightly lowered its
2015 copper output forecast to 5.88 million tonnes and the
country's regulator said miners could expect increased scrutiny
and sanctions if they broke environmental rules. 
 
    In news that could help staunch LME nickel's 29
percent slide this year, producers in Indonesia may only build
half of the 12 new smelters anticipated this year and some may
not commence production immediately due to low global prices, a
senior industry official said. 
    PRICES    
    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 = 6.2093 Chinese yuan)

 (Reporting by Melanie Burton; Editing by Joseph Radford and
Subhranshu Sahu)
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