May 26, 2015 / 9:52 AM / 5 years ago

METALS-Copper price hits three-week low as dollar rally overshadows China prospects

* LME reopens after long weekend

* Patience still required for nickel upside - ANZ

* Nickel, tin hit month low, aluminium hits 2/12-month trough (Adds closing prices, details)

By Maytaal Angel

LONDON, May 26 (Reuters) - Copper hit a three-week low on Tuesday, as a strong dollar spurred profit-taking and overshadowed hopes that demand from top consumer China will recover, thanks in part to government stimulus measures.

China’s state planning agency on Monday listed more than 1,000 proposed projects totalling 1.97 trillion yuan ($318 billion) it is inviting private investors to help fund, build and operate. Copper is used extensively in construction.

But weighing on copper, the dollar rose more than 1 percent against a currency basket, helped by upbeat U.S. consumer confidence and durable goods data and by increasing nervousness about Greece.

A stronger dollar makes dollar-priced metals more expensive for holders of other currencies.

“Fears are emerging regarding copper’s recent strength. People are saying its done too much too soon. Sellers are emerging to test recent support,” a trader said.

Three-month LME copper cut early gains to close down 0.9 pct at $6,106.50 a tonne. Copper has been on a mostly upward trajectory since touching 5-1/2 year lows in January.

London Metal Exchange data showed copper stocks MCU-STOCKS fell to 327,800 tonnes. The metal was widely tipped to move into significant surplus this year, but this has yet to transpire, with LME stocks having failed to rise for the last two months.

“There was over-optimism about mine supply (this year). Physical demand has been disappointing (but) we expect it to pick up in the second half,” said Caroline Bain, senior commodities economist at Capital Economics.

Nickel rallied nearly 2 percent overnight before retreating to end down 0.3 percent at $12,675 a tonne, after LME data showed nickel stocks hit a record of 463,800 tonnes. <0#MNISTX-LOC>

The metal hit its lowest in about a month earlier.

ANZ said three of its four bullish indicators had turned positive for nickel, including a drawdown in Chinese stores of nickel pig iron (NPI), rising ferrronickel imports and higher NPI prices, but it remained cautious on the outlook.

“If LME nickel stocks start to decline, we would have greater confidence that the market had found a bottom,” the bank said.

Aluminium ended down 0.9 percent at $1,752 a tonne, having hit its lowest since mid-March earlier, under pressure from rising supplies and worldwide falls in premiums or surcharges for physical metal deliveries.

Zinc ended unchanged at $2,177 a tonne, lead closed down 0.6 percent at $1,936 a tonne, while tin closed down 2.1 percent at $15,490 a tonne, having earlier hit its lowest in a month.

“China imported a massive volume of tin ores and concentrates in April, once again illustrating why the market is oversupplied and why supply cuts from Indonesia (rather than simply rhetoric) are required,” said Macquarie.


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 = 6.2025 Chinese yuan renminbi) (Additional reporting by Melanie Burton; Editing by David Holmes and Susan Thomas)

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