April 7, 2016 / 9:37 AM / 4 years ago

METALS-London copper hits one-month low as support crumbles

* US launches trade investigation into global aluminium market

* New Caledonia starts nickel laterite ore shipments to China

* Coming Up: U.S. Weekly jobless claims; 1230 GMT (Recasts, updates with comment, detail)

By Melanie Burton

MELBOURNE, April 7 (Reuters) - London copper dropped to a one-month low on Thursday, as simmering demand concerns undermined prices that, having broken a key chart support, came under further selling pressure.

Prices fell through support around $4,770 a tonne to the weakest since early March. Traders and analysts said there was no clear reason behind the move, but break-in support had triggered technical selling.

“Copper fell below $4,750 which triggered further selling pressure,” said analyst Eugen Weinberg at Commerzbank.

Copper prices had earlier found support as minutes of a Federal Reserve meeting showing caution among policymakers on raising U.S. interest rates knocked down the dollar and underpinned metal prices.

The U.S. central bank appears unlikely to raise rates before June amid concerns over its limited ability to counter the blow of a global economic slowdown, minutes from the March 15-16 policy meeting suggest.

The Fed’s caution hit the dollar, which was pinned at 94.420 against a basket of currencies, near its lowest since October. Metals priced in the greenback become cheaper for buyers paying with other currencies when the dollar falls.

Three-month copper on the London Metal Exchange was down 1.3 percent at $4,726 a tonne by 0802 GMT. Earlier in the session prices hit the lowest since March 2 at $4,722.

Shanghai Futures Exchange copper closed down 0.2 percent at 36,650 yuan ($5,664) a tonne.

But copper prices will be contained in the medium term given headwinds to Chinese demand, BMI Research said in a note.

“Prices will be prevented from rallying more strongly by continued disappointing China economic data and a further depreciation of the Chinese yuan,” wrote BMI Research, which expects copper to average $4,900 per tonne in 2016.

However, a recent Reuters poll shows the economy at the world’s top copper consumer may be stabilising.

China’s exports likely returned to growth for the first time in nine months in March while the pace of bank lending may have picked up, according to the poll.

Selling in copper ramped pressure on other metals, including zinc, which fell 2 percent to $1,771 a tonne.

Among other metals, LME aluminium held on to most of its more than 1 percent loss from the prior two sessions. Prices have been hit hard by a China-driven supply overhang.

The U.S. International Trade Commission said it has launched an investigation into the U.S. aluminium industry and global trade in the metal, a move that analysts said was aimed at staunching a steady flow of Chinese exports.

“The principal driver of exports is China’s oversupply. That’s not likely to change in the near term because production is still well over demand,” said Paul Adkins, managing director of Beijing-based consultancy AZ China.

In nickel, New Caledonia said will allow two companies to export ore to China, ending a long-standing ban as its economy wrestles with weak commodity prices and the potential loss of a struggling Australian customer.

More supply of nickel ore will cut into demand for refined nickel from China’s huge stainless steel industry.

LME nickel fell 1 percent to $8,505 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

$1 = 6.4711 Chinese yuan Reporting by Melanie Burton; Editing by Himani Sarkar and Subhranshu Sahu

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