September 12, 2016 / 2:48 AM / 4 years ago

METALS-Copper hits lowest in more than two months on risk aversion

* China copper demand re-emerges after summer lull - industry

* China industrial production figures due on Tuesday (Adds comment, detail, updates prices)

By Melanie Burton

MELBOURNE, Sept 12 (Reuters) - London copper fell to its weakest level since June on Monday after risk aversion roiled wider markets, and as investors turn increasingly bearish on the metal given prospects for rising supply.

Jitters on Wall Street spilled across markets on Monday after investors were rattled by rising bond yields and talk the Federal Reserve might be serious about lifting U.S. interest rates as early as next week.

“It started in the States on Friday with weak closes all round and the negative tone has continued today,” a broker in Hong Kong said.

Three-month copper on the London Metal Exchange eased 0.7 percent to $4,601 a tonne by 0709 GMT, following 0.7-percent losses in the previous session. Prices earlier fell to to $4,582 a tonne, the weakest since June 20.

Shanghai Futures Exchange copper slid 1.2 percent to 36,170 yuan ($5,416) while ShFe zinc and lead fell more than 2 percent and nickel more than 3 percent.

ShFE tin fell 3.9 pct after China’s stocks SSN-TOTAL-D more than doubled in the latest week.

U.S. Federal Reserve policymakers on Friday headed towards their policy meeting later this month divided on whether a rate rise is in the offing.

Higher interest rates raise financing costs in the cash intensive metals industry and are likely to dampen activity and prices.

Adding to jitters, China’s central bank chief economist said the country should take steps to curb the flow of capital into the property market and state-owned companies to help slow the rise of debt levels in the economy.

Emerging Chinese copper demand after a summer factory lull and buying by traders buoyed by cheap premiums and weak global prices looks set to fuel a recovery in China’s copper imports this month after a plunge to 12-month lows in August.

But traders and analysts said that may not be enough to offset the impact of an expected flood of new supply this year.

Hedge funds and money managers sharply boosted their net short position in copper futures and options in the week to Sept. 6, U.S. Commodity Futures Trading Commission data showed.

Later this week, China’s monthly data is due, including industrial production, which should offer more insight into its metals demand.

Zinc miners have begun to respond to a more than 40 percent rebound in prices this year. Lundin Mining could double zinc production at its Neves-Corvo mine in Portugal, its chief executive said.

LME nickel fell 3.2 percent while LME zinc and lead fell more than 1 percent amid weak prices in the steel market as China supply ramps back up following a G20-linked shutdown.


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 = 6.6782 Chinese yuan Reporting by Melanie Burton; Editing by Richard Pullin and Biju Dwarakanath

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