December 22, 2014 / 11:24 AM / 5 years ago

METALS-Copper up on view it looks cheap after falls

* Copper surplus forecasts for 2015 being trimmed back

* Copper heading for double-digit pct drop in 2014

* LME nickel stocks hit another record level (Recasts, adds comment, updates prices, changes dateline)

By Maytaal Angel

LONDON, Dec 22 (Reuters) - Copper edged up for a second consecutive day on Monday as a recovery in oil prices and global equities helped solidify the view that copper looked cheap following recent steep price drops.

The metal hit its lowest in 4-1/2 years earlier this month and is down some 13 percent this year on worries the market is heading into a surplus after several years of deficit, and on slowing economic growth in top copper consumer China.

“BHP Billiton, Rio Tinto and Glencore-Xstrata have all downgraded more or less their copper (output) forecasts at recent investor days, and Barrick is going to shut down the Lumwana mine in Zambia, so in the short term prices will certainly rise,” said Deutsche Bank analyst Grant Sporre.

He added, however: “I still think 2015 copper prices will average lower than 2014 because you have to be either super bullish on demand or super bearish on supply to get a deficit market (forecast for next year).”

Three-month copper on the London Metal Exchange rose 0.26 percent to $6,416.50 a tonne by 1052 GMT, extending gains of more than 1 percent on Friday.

Sentiment rose on stronger oil prices, drawing investors into copper after equity markets rallied into a holiday-shortened week and consensus spread that Brent crude futures would likely remain above $60 for the rest of the year.

Also giving copper some support, the dollar fell versus the euro earlier, making dollar-priced metals cheaper for European and other non-U.S. investors.

The International Copper Study Group (GSCI) said on Friday the global copper market showed a 83,000 tonnes surplus in August, giving succour to industry bets that the market will be in net surplus next year.

On Monday, LME data showed copper stocks fell 1,300 tonnes to 168,700 tonnes, making for five consecutive days of falls. Still overall stocks have been mostly rising since August and are near their highest since May.

Offsetting some of the new supply heading into the market, Chile’s Codelco said an expansion of its El Teniente underground mine has fallen around two to three years behind schedule.

Elsewhere, three-month nickel rose 1.12 percent to $15,775 a tonne as investors went bargain hunting following losses of 6.4 percent last week. Still the gains were expected to be short lived near term.

LME data out earlier showed nickel stocks rose to a new record level of 408,408 tonnes, cementing views that Indonesia’s ore ban had not yet tightened the market enough to justify a price uptrend for now.

PRICES

Three month LME copper

Most active She copper

Three month LME aluminium

Most active She aluminium

Three month LME zinc

Most active She zinc

Three month LME lead

Most active She lead

Three month LME nickel

Three month LME tin

$1 = 6.2199 Chinese yuan termini Editing by Jeremy Gaunt

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