July 10, 2017 / 10:22 AM / 15 days ago

METALS-Copper hits two-week low on inventory rise, Chinese data

3 Min Read

* Copper sinks to lowest since June 27

* Aluminium in biggest one-day drop in over 2 months

* LME/ShFE arb: tmsnrt.rs/2oQ5nm2

* Shfe tin stocks eclipse LME stocks: reut.rs/2t47LHN (Updates with closing prices)

By Eric Onstad

LONDON, July 10 (Reuters) - Copper slipped to the lowest in two weeks on Monday as rising inventories indicated healthy supplies, outweighing worries about possible strikes at mines in Chile.

Also pressuring the metals market was subdued inflation data in top market China as the economy loses momentum.

China's producer price inflation was unchanged in June amid lingering oversupply issues in the steel sector and as signs of economic weakness weighed on the outlook for prices.

"The data was quite steady, giving policymakers in China a sweet spot ... to implement deleveraging (and) fine tuning of the economy," said Xiao Fu, head of commodity market strategy at Bank of China International in London.

Some investors have been worried that monetary tightening in China would hit economic growth, but Fu said the authorities there were wary about moving too fast.

"Overall, I think that there are some headwinds from a stronger U.S. dollar and deleveraging in China, so we are neutral to cautious about base metals in the second half."

* COPPER: London Metal Exchange benchmark copper closed down 0.1 percent at $5,824 a tonne, paring losses after touching $5,792, the weakest since June 27.

* COPPER INVENTORIES: Stocks in LME warehouses rose by 4,900 tonnes to 319,975 on Monday and have gained 32 percent since June 28, showing supplies are adequate.

* COPPER MINES: Losses in copper were limited by the prospect of strikes. Antofagasta in Chile has been facing possible strikes at two mines since last week.

* ZINC: LME zinc finished down 0.5 percent at $2,780.50. Alastair Munro, of broker Marex Spectron, said the metal has struggled to break $2,809/11 July highs and that he expects support into the $2,725 area.

* ALUMINIUM: LME aluminium dropped 1.7 percent to end at $1,897, the biggest one-day percentage fall since April 27.

"A short-term pullback can't be ruled out first towards $1,912/1,910 ... with next support at $1,900," Stéphanie Aymes, head of technical analysis at Societe Generale, said in a note. "However this is just a consolidation within the overall up trend and eventually the up move is expected to persist."

* TIN: Tin stocks on the Shanghai Futures Exchange have surged in the past two months and now stand at about three times the volume of LME tin stocks. (reut.rs/2t47LHN)

LME tin closed 1.6 percent higher at $19,880.

* DOLLAR: The dollar touched a two-month high against the Japanese yen on Monday after robust jobs data propped up U.S. Treasury yields. A stronger dollar erodes the purchasing power of buyers outside the United States for commodities priced in the U.S. currency.

PRICES: Lead gained 1.1 percent to finish at $2,320 and nickel rose 1 percent to $9,010.

Additional reporting by Melanie Burton; Editing by Susan Fenton and David Evans

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