May 31, 2019 / 4:34 AM / 2 months ago

METALS-Copper set for steepest monthly fall in 3-1/2 yrs amid demand worries

(Updates prices, adds details)

By Mai Nguyen

SINGAPORE, May 31 (Reuters) - London copper eased on Friday and was on track for a third straight and biggest monthly fall in three-and-a-half years as global trade tensions raised concerns on weaker demand.

Benchmark copper on the London Metal Exchange (LME) fell 0.2% to $5,839.50 a tonne at 0748 GMT, and was down 9% for the month of May, the strongest monthly decline since November 2015. The metal has fallen 10.3% in the past three months.

U.S. President Donald Trump, responding to a surge of illegal immigrants across the southern border, vowed on Thursday to impose a tariff on all goods coming from Mexico, starting at 5% and ratcheting much higher until the flow of people ceases.

Chinese data released on Friday showed a disappointing performance in the manufacturing sector in May, adding to pressure on Beijing to roll out stimulus measures to support its economy hit by a trade war with the United States.

“We expect (the Chinese) government will continue to adopt many stimulus tools available to protect the economy, including further monetary easing such as reserve requirement ratios cuts and fiscal stimulus,” said analyst Helen Lau of Argonaut Securities in a note.

FUNDAMENTALS

* COPPER TCs/RCs: Spot prices for refining copper concentrate have fallen to their lowest in 6-1/2 years and look set to stay under pressure, as China cements itself as a dominant producer of processed metal.

* COPPER SUPPLY: Disruptions in top copper producer Chile, political and power problems in Zambia and restrictions on scrap imports into China are expected to weigh on copper supplies and likely lead to a tighter market in the second half of 2019.

* CODELCO OUTPUT: Chile’s Codelco, the world’s top copper miner, reported an 18% year-on-year drop in its first-quarter copper output on Thursday to just 342,000 tonnes, as unions at its Chuquicamata mine announced they would hold talks with the company in hopes of averting a strike.

* ZAMBIA COPPER: Zambia says its decision to punish miner Vedanta’s local operation for breaching environmental and financial regulations is a signal to other firms to follow the law, mines minister Richard Musukwa said on Thursday.

* PRICES: Three-month aluminium in London rose 0.3% while zinc dropped 1%. In Shanghai, copper fell 0.9% to 46,180 yuan ($6,691.20) a tonne, nickel eased 0.1% and lead declined 1.2%.

* SHANGHAI STOCKS: Nickel inventories in warehouses monitored by the Shanghai Futures Exchange rose 9.2% from last Friday to 9,938 tonnes, the exchange said.

* NICKEL: The Philippines’ nickel ore production in the first quarter rose 3% from a year earlier to 2.97 million dry metric tonnes, despite zero output from more than half of the country’s 28 mines, the government said on Thursday.

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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

ARBS ($1 = 6.9016 Chinese yuan)

Reporting by Mai Nguyen; editing by Richard Pullin & Uttaresh.V

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