December 6, 2011 / 10:55 AM / in 8 years

METALS-Copper sheds 1 pct on S&P warning, China fears

* Copper off over 1 pct as euro zone worries persist
    * "Greater downside risks" for Asian economies adds weight
    * Markets cautious ahead of EU summit, ECB meeting
    * Coming up: German Oct industrial output on Wednesday

    By Chris Kelly and Susan Thomas
    NEW YORK/LONDON, Dec 6 (Reuters) - Copper fell over 1 percent on
Tuesday, hit by Standard and Poor's recent downgrade warning for the
euro zone and fears Chinese growth could slow further, limiting
demand prospects from the world's top metals buyer.
    Down for the first time in three days, copper fell in tandem with
other risk assets like global equities and the euro, after Standard &
Poor's warned late on Monday it could cut credit ratings of 15 euro
zone countries, including the top-tier ratings of Germany and France,
the region's two largest economies.
    Further pressure in the red metal stemmed from a warning about
emerging East Asian economic growth, fanning worries that China's
near 40-percent intake of global copper demand could ease if economic
conditions deteriorate.
    "It's a question market about the outcomes in Europe and in
China," said Adam Sarhan, chief executive of Sarhan Capital.
    "Regarding China, we're continuing to dance back and forth
between whether or not they have a hard landing or a soft landing."
    London Metal Exchange (LME) three-month copper shed $105,
or 1.3 percent, to end at $7,835 per tonne. Open interest grew over
5,700 lots to 298,590 lots on Monday -- its highest level since
    In New York, the key March COMEX contract fell by 4 cents
to settle at $3.5755 per lb, after dealing between $3.5250 and
    Futures volumes remained on the light side at the start of the
week. A little more than 40,000 lots traded late in New York -- a
third below the 30-day norm, according to preliminary Thomson Reuters
    Technically, copper's price behavior was "semi-constructive",
analysts said, consolidating in the upper end of the range from last
Wednesday's breakout.
    Copper has fallen more than 20 percent from a record high of
$10,190 per tonne and $4.60 per lb in February, but has risen almost
18 percent since late October. It rose nearly 10 percent last week.
    "Copper is slightly down because of the S&P threat to downgrade
euro zone countries and because of little traction on equity markets,
but the sentiment is still cautiously optimistic," said Andrey
Kryuchenkov, an analyst at VTB Capital.
    A summit of EU leaders will try to put together a convincing
agreement on Friday.
    The S&P warning hurt the euro, but the currency recovered after a
surprise jump in German industrial orders.
    The dollar gave up most of its earlier gains but remained in
positive territory against a basket of currencies . A stronger
dollar makes commodities more expensive for holders of other
    "Until we see a structural solution for the euro zone debt
problem, we will not change our bearish view on metals," said
Gianclaudio Torlizzi, a partner at metals consultancy T-Commodity.
    "But we are flexible. The situation is very fluid, and can change
from one day to the next."ASIAN RISK
    The ADB said in its Asian Economic Monitor that Emerging East
Asia's economic momentum remained robust, but the region faced
greater risks than just three months ago as Europe's debt problems
and the fragile U.S. economy could worsen into another global crisis.
    "We are still in an economic slowdown and latest economic data
from the U.S. such as factory orders were weaker than expected,"
Credit Suisse said in a note. "We also think that the $8,000 mark for
copper will be difficult to break."
    Three-month tin , was untraded at the close but was last
bid at $20,300 per tonne up from $19,900 at the close on Monday. But
the metal is still down around 40 percent since a record high $33,600
hit in April.
    Smelters in Indonesia's main tin-producing region of Bangka
island stopped shipments from Oct. 1 in a self-imposed bid to push
benchmark tin prices above $23,000 a tonne. But some smelters started
to flout the ban last week.
    Tin stocks rose 230 tonnes to 12,395, and tightness in the market
has been eroding since last week. Canceled warrants, or metal
earmarked for delivery, have almost halved to 11 percent from 20
percent last week.
 Metal Prices at 1920 GMT
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
 Metal            Last      Change  Pct Move   End 2010   Ytd Pct
 COMEX Cu       357.50       -4.05     -1.12     444.70    -19.61
 LME Alum      2112.00      -18.00     -0.85    2470.00    -14.49
 LME Cu        7834.00     -106.00     -1.34    9600.00    -18.40
 LME Lead      2125.00        5.00     +0.24    2550.00    -16.67
 LME Nickel   18400.00     -105.00     -0.57   24750.00    -25.66
 LME Tin      20300.00      400.00     +2.01   26900.00    -24.54
 LME Zinc      2044.00        4.00     +0.20    2454.00    -16.71
 SHFE Alu     16170.00      -50.00     -0.31   16840.00     -3.98
 SHFE Cu*     57670.00     -290.00     -0.50   71850.00    -19.74
 SHFE Zin     15670.00      -45.00     -0.29   19475.00    -19.54
** Benchmark month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07
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