April 18, 2016 / 1:48 AM / in 4 years

METALS-London copper slips as oil weakness drags after Doha meet

* Metals trim early losses as iron ore recovers

* Speculators switch to net short position on copper (Updates prices)

By Melanie Burton

MELBOURNE, April 18 (Reuters) - London copper slipped on Monday, weighed down by sharply lower oil prices after a meeting of producers in Doha failed to reach a deal to trim supply, undermining cost support for metals.

A deal to freeze oil output by OPEC and non-OPEC producers fell apart on Sunday after Saudi Arabia demanded that Iran join in despite calls on Riyadh to save the agreement and help prop up crude prices.

The lower oil price and anticipated oversupply would continue to drag on copper, said analyst Dominic Schnider of UBS Wealth Management in Hong Kong.

“Oil prices falling also raises concerns for emerging market economies, so under those circumstances it’s hard to see metals prices doing well,” he said. Falling oil prices cheapen production costs for commodities, putting pressure on prices.

“China numbers have been better than expected but if you look at tier three and four housing, it’s still weak, and that’s why I’m not so keen like some others chasing the positive copper story,” he said, referring to medium and smaller cities.

Schnider sees a floor for copper prices around $4,400 a tonne.

Three-month copper on the London Metal Exchange slipped 0.5 percent to $4,784 a tonne by 0809 GMT, after small losses in the previous session.

Shanghai Futures Exchange copper fell 1 percent to 36,610 yuan ($5,651) a tonne.

LME copper posted its largest weekly gain in six weeks in the week to Friday, finishing up 3.4 percent after signs that growth is bottoming out in top consumer China.

China on Friday posted its slowest economic growth since 2009 but a surge of new debt appears to be fuelling a recovery in factory activity, investment and household spending in the world’s second largest economy.

Adding to price support, heavy rains in central Chile have prompted global miner Anglo American Plc and state-owned producer Codelco to temporarily suspend operations at two major copper mines with combined annual capacity of 880,000 tonnes.

Hedge funds and money managers switched to a net short position in copper for the first time since February in the week to April 12, U.S. data showed on Friday.

A recovery in steel and iron ore prices on Monday was fuelling gains in zinc and nickel, used by galvanised and stainless steel industries respectively.

“Sceptical consumers are still holding back but the technical (picture) would suggest that they may soon have to bite the bullet and accept these higher prices,” broker Triland said in a note.

LME zinc and LME nickel both traded up around half a percent at $1,881 and $8,960 a tonne, respectively.

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 = 6.4780 Chinese yuan Reporting by Melanie Burton; Editing by Richard Pullin and Subhranshu Sahu

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