March 14, 2012 / 10:28 AM / 6 years ago

METALS-China demand fears drag copper down from 1-wk high

* Copper sinks after China maintains property controls
    * Losses drag copper back toward middle of months-long range
    * China refined lead consumption up this month
    * Coming up: U.S. regional manufacturing data Thurs.

    By Chris Kelly and Harpreet Bhal	
    NEW YORK/LONDON, March 14 (Reuters) - Copper retreated from a one-week
high on Wednesday, hit by currency-related selling and concerns about an
uncertain demand outlook from top-consumer China that worked to drag prices back
toward the middle of a months-long trading range.	
    Copper tracked overnight losses in Asian markets. Shanghai shares sustained
their biggest one-day loss this year after Premier Wen Jiabao doused
expectations of any near-term easing of measures in the country's property
sector, a key consumer of the red metal.  	
    The comments roiled growth-sensitive commodities like crude oil and
industrial metals, which one day earlier were flying high on the back of
better-than-expected U.S. retails sales data and a brighter economic outlook
from the Federal Reserve.	
    "While the U.S. economy continues to improve, we are completely subject to
global shocks," said Sean McGillivray, vice president and head of asset
allocation for Great Pacific Wealth Management in Oregon.	
    London Metal Exchange (LME) benchmark copper shed $100 to close at
$8,460 a tonne, reversing from Tuesday's one-week peak of $8,608.74.	
    In New York, the May COMEX contract fell by 5.45 cents, or 1.4
percent, to settle at $3.8480 per lb, near the bottom end of its $3.8335 to
$3.9180 session range.	
    The loss dragged COMEX copper prices back toward the middle of a well-worn
range this year, between $3.70 and $4.	
    "I could easily see it challenge the $3.70 area again," McGillivray said.	
    "That's an area where you could be looking to enter long. Near $4, you'd be
looking at taking profits."	
    Volumes remained relatively thin midway through the week. A little more than
48,700 lots traded in late New York trade, more than a third below the 30-day
norm, according to preliminary Thomson Reuters data.	
    On Tuesday, Fed chairman Ben Bernanke acknowledged recent signs of strength
in the U.S. economy, but squashed hopes of another round of quantitative
easing. 	
    "The key event this week is people scaling down expectations of quantitative
easing. Bernanke's speech yesterday made it less likely. The U.S. economy has
been steadily recovering so they don't need it now," said Andrey Kryuchenkov,
analyst at VTB. 	
    In reaction, the dollar surged to a one-month high against the euro, making
dollar-denominated assets like metals more expensive for non-U.S. investors.
 	
    Copper has gained more than 11 percent this year, partly buoyed by hopes
demand from China, which consumes about 40 percent of global consumption, would
pick up after the Lunar New Year, with recent inflation data boosting hopes
policymakers could take further steps in easing monetary policy.	
    "Copper inventories are dwindling, canceled warrants are amazingly resilient
and premiums are up in Europe, but you still need that fundamental Asian push
which we have not seen yet," Kryuchenkov said.	
    	
    SUPPLY-SIDE SUPPORT	
    Heavy rains in northern Chile cut off roads at No. 3 copper mine Collahuasi
  and Cerro Colorado, but operations have been little
affected, worker and company sources said on Tuesday.  	
    In other metals, tin futures shed $450 to end at $23,800 a tonne,
following a rise of more than 3 percent on Tuesday. This after Indonesia's Koba
Tin began loading a 280-tonne shipment after demonstrators blocked the
producer's exports this week over a pay dispute.  	
    Lead fell $52 to finish at $2,102 a tonne.	
    China's consumption of refined lead has risen this month because of higher
output of lead-acid batteries, manufacturers of which are the country's top
users of the metal. Industry sources see demand rising in the next three months.
 	
    A monthly bulletin from Lisbon-based International Lead and Zinc Study Group
(ILZSG) showed the global lead market was in surplus by 9,700 tonnes in January,
while the global market for zinc was in surplus by 22,400 tonnes in January.
  	
	
 Metal Prices at 1834 GMT
                                                                  
  Metal            Last      Change  Pct Move   End 2011   Ytd Pct
                                                              move
  COMEX Cu       384.05       -6.20     -1.59     343.60     11.77
  LME Alum      2229.00      -29.00     -1.28    2020.00     10.35
  LME Cu        8465.00      -95.00     -1.11    7600.00     11.38
  LME Lead      2101.00      -53.00     -2.46    2035.00      3.24
  LME Nickel   19575.00      125.00     +0.64   18710.00      4.62
  LME Tin      23800.00     -450.00     -1.86   19200.00     23.96
  LME Zinc      2074.50      -35.50     -1.68    1845.00     12.44
  SHFE Alu     16165.00      -35.00     -0.22   15845.00      2.02
  SHFE Cu*     60370.00     -460.00     -0.76   55360.00      9.05
  SHFE Zin     15810.00     -115.00     -0.72   14795.00      6.86
 ** 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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