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8 months ago
METALS-Copper steady ahead of Fed decision, helped by China growth signs
December 14, 2016 / 12:52 PM / 8 months ago

METALS-Copper steady ahead of Fed decision, helped by China growth signs

* Fed tipped to hike rates 25 bps, announcement due at 1900 GMT

* Some caution in case Fed hints at a faster pace of tightening

* China bank lending heads for record as Nov new loans rise

* New Caledonia nickel miners seek to step up China shipments (Adds closing prices, details)

By Maytaal Angel

LONDON, Dec 14 (Reuters) - Copper steadied on Wednesday as investors remained upbeat on China's growth prospects but were anxious ahead of an expected U.S. rate rise and Federal Reserve commentary on the outlook for monetary policy and growth next year.

Investors are concerned that the dollar will get a further boost if the central bank signals an acceleration in the pace of rate rises next year to deal with an expected ramp-up in fiscal spending under incoming President Donald Trump.

The spending plan is seen as inflationary and copper has until now attracted investment as an inflation hedge. This has happened despite a dollar rally, which usually weighs on metals priced in the U.S. currency and could yet do so again.

"Copper has been correlated with the dollar but we don't think it's sustainable. Ultimately the stronger dollar is making copper more expensive and at some point that will bite," said Caroline Baine, senior commodities economist at Capital Economics.

"Its been getting ahead of itself on optimism over demand, both from China and the U.S. We think there won't be new stimulus in China and over the first quarter the impact of this year's stimulus will fade," she said.

Three-month copper on the London Metal Exchange ended up 0.5 percent at $5,722 a tonne.

The metal has risen 22 percent since mid-October, driven by encouraging signs of demand growth in China, which consumes nearly half the world's copper, and as stocks are withdrawn from global exchange warehouses.

In upbeat demand signals from Asia, Chinese banks extended 794.6 billion yuan ($115 billion) in new yuan loans in November and look set to extend a record amount of credit this year as Beijing boosts the economy to meet growth targets.

But weighing on the metal was data showing a third consecutive day of big inflows into LME warehouses, which has pushed on-warrant or available copper stocks up 68 percent in three days.

In other metals, nickel ended up 0.2 percent at $11,420.

New Caledonia's nickel ore miners have applied to increase shipments to China after an environmental crackdown on Philippine mine supply this year caused prices to spike, four sources familiar with the matter said this week.

Aluminium ended up 0.3 percent at $1,746, zinc ended up 3.9 percent at $2,810, lead ended down 0.3 percent at $2,316 while tin ended down 0.9 percent at $21,100.

The global zinc market deficit narrowed slightly to 17,000 tonnes in October, while the global lead market saw a surplus of 11,000 tonnes, industry data showed. [ nL5N1E94JS]

PRICES

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 = 6.9048 Chinese yuan Editing by David Evans and Susan Fenton

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