October 18, 2011 / 9:53 AM / 9 years ago

METALS-Copper falls on Europe anxiety, China GDP

* China Q3 GDP slows to 9.1 pct; slightly lower than expected
    * Freeport's Grasberg resumes production at reduced rate
    * Coming Up: U.S. PPI inflation for Sept; 1230 GMT


    By Susan Thomas	
    LONDON, Oct 18 (Reuters) - Copper fell on Tuesday after top metals consumer
China's economic growth data came in a touch lower than expected and on concerns
about its biggest trading partner Europe's festering debt problems.	
    Strikes at two Freeport-McMoran Copper & Gold mines, including one
of the world's largest copper mines in Indonesia, lent little support.	
    China's economy grew 9.1 percent in the third quarter, its weakest pace
since early 2009, just below market forecasts. Its steel and power output also
fell, a further sign that economic problems in the West, and Beijing's year-long
monetary tightening campaign, have begun to pinch. 	
    "The comment from Germany put metals on the defensive, and overnight the
market was disappointed by the Chinese numbers. Although they weren't far away
from forecasts, it hasn't helped," BNP Paribas analyst Stephen Briggs said.	
    Germany warned on Monday a summit of EU leaders next Sunday would not
produce a miracle cure for the euro zone's sovereign debt crisis, quashing
expectations of a breakthrough. 	
    Compounding Europe's problems, German investor morale dropped to its weakest
in nearly three years in October. 	
    The euro fell and the dollar rose against a basket of currencies. A stronger
dollar makes commodities priced in the U.S. unit more expensive for holders of
other currencies. 	
    The comments and data highlight the risks Beijing faces if trading partner
Europe does not resolve its problems, and the particular vulnerability of base
metals, used widely in construction and industry, to global economic growth.	
   "Base metals are far more geared towards economic growth than other commodity
sectors. In good years they increase much more strongly and when the economy is
poor physical demand declines dramatically," Briggs said.	
    Three-month copper on the London Metal Exchange was $7,294 a tonne
in official rings, down around 2.7 percent from $7,495 at the close on Monday.	
    Brent crude futures , by contrast, dipped 0.9 percent, to just under
$110. 	
    "Slowing growth in China has given the bears new reasons to roar this
morning," RBC said in a note. "China's economy grew 9.1 percent in Q3 from a
year earlier which has sparked concerns that Europe's debt crisis is dragging on
the global economy."	
    UBS economist Wang Tao said China's growth was bound to slow further as
export growth could fall to as low as single-digit increases by 2012.
 	
     	
    	
    POOR FUNDAMENTALS	
    Zinc fell to its lowest in around two weeks, and was $1,854 per
tonne in rings from $1,903 at the close on Monday. The metal, used to galvanize
steel, is perceived to have the poorest fundamentals among base metals. 	
    Recent data from the International Lead and Zinc Study data shows the global
refined zinc market will have a 317,000 tonne surplus this year and 135,000
tonnes surplus next year. 	
    "The market seems pretty short right now, I think that's why we had the
run-up in the last few days," a trader at the LME said. "The market was running
a bit too short so we've had a few people stopping out."	
    Short selling is a common way for hedge funds and other investors to bet on
falling commodities or shares prices. 	
    The trader added that the uncertainty over Europe was weighing heavily on
the base metals market. Those worries neutralised any boost to copper prices
from supply disruptions.	
    Freeport resumed producing at a reduced rate on Tuesday, after halting
output on Monday, but it said it is looking at a long-term shutdown of its
Grasberg mine to safeguard multi-billion dollar assets as it struggles with
labour disruptions. 	
    In Peru, workers at Freeport's mine launched a hunger strike on Monday,
hoping to pressure the government to resolve a labour dispute 19 days into a
walkout at the Cerro Verde copper mine. 	
    Aluminium was $2,183.50 in rings from a close of $2,217, lead
 was $1,935 per tonne from $1,986, nickel was $18,550 per tonne
from $18,995. Tin , untraded in rings, was bid at $20,625 per tonne from
$21,495 at Monday's close.	
        	
 Metal Prices at 1204 GMT
 Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T
  Metal            Last      Change  Pct Move   End 2010   Ytd Pct
                                                              move
  COMEX Cu       329.90       -7.60     -2.25     444.70    -25.82
  LME Alum      2185.00      -32.00     -1.44    2470.00    -11.54
  LME Cu        7237.50     -257.50     -3.44    9600.00    -24.61
  LME Lead      1926.50      -59.50     -3.00    2550.00    -24.45
  LME Nickel   18611.00     -384.00     -2.02   24750.00    -24.80
  LME Tin      20681.00     -814.00     -3.79   26900.00    -23.12
  LME Zinc      1852.50      -50.50     -2.65    2454.00    -24.51
  SHFE Alu     16355.00     -220.00     -1.33   16840.00     -2.88
  SHFE Cu*     53680.00    -2150.00     -3.85   71850.00    -25.29
  SHFE Zin     14515.00     -745.00     -4.88   19475.00    -25.47
 ** Benchmark month for COMEX copper
 * 3rd contract month for SHFE AL, CU and ZN
 SHFE ZN began trading on 26/3/07
0 : 0
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