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METALS-London copper prices drop on China regulation concerns
February 23, 2017 / 8:17 AM / 10 months ago

METALS-London copper prices drop on China regulation concerns

* Firmer dollar weighs on LME metals complex

* Supply concerns underpin copper

* Coming Up: US weekly jobless claims at 1330 GMT (Adds comment, detail, updates prices)

By Melanie Burton

MELBOURNE, Feb 23 (Reuters) - London copper prices slipped on Thursday, as concerns about fresh regulations that could dampen China’s property boom steepened a correction that began with improving prospects for a U.S. interest rate hike in March.

China’s Vice Housing Minister Lu Kehua told reporters on Thursday that preparatory work was now being done for a nationwide property tax, but did not provide further details. Further property taxes could cool the construction market, a main demand driver for metals.

Lu’s comments came as China also announced plans for greater oversight of its asset management industry, souring sentiment in the stock market.

“It’s been around for the past few days. All these things add up and with regulators at least talking about a property tax, at some point it will come in,” said a metals broker in Hong Kong.

Three-month copper on the London Metal Exchange had slipped 0.9 percent to $5,987 a tonne by 0813 GMT, after easing 0.3 percent on Wednesday. Prices earlier fell to $5,960.50 a tonne, the lowest since Feb. 20.

Prices have been bouncing around the $5,960-$6,200 a tonne range since the middle of February, touching a 20-month top of $6,204 on Feb. 13 after a strike was announced at Chile’s Escondida mine, the world’s biggest copper producer.

Shanghai Futures Exchange copper eased 1 percent to 48,390 yuan ($7,035) a tonne.

Other LME metals, zinc and nickel fell more than 1 percent.

The dollar moved up from overnight lows and steadied on Thursday on the possibility of a U.S. interest rate hike next month. A stronger dollar erodes purchasing power for those paying for commodities with other currencies.

Many Federal Reserve policymakers said it may be appropriate to raise interest rates again “fairly soon” should jobs and inflation data come in line with expectations, according to policy meeting minutes released on Wednesday.

Copper has been underpinned by concerns over supply. BHP Billiton’s decision this week to give up its legal right to replace striking workers at Escondida is aimed at sacrificing some output to undermine the union’s position, analysts said.

In news, miner and trader Glencore reported an 18 percent increase in core profits for 2016 on Thursday and said the company had never been so well positioned, although an ill-timed coal hedge had eaten into energy profits.

The miner expects copper production in 2017 to be around 1.355 million tonnes, down about 5 percent from last year.

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 = 6.8782 Chinese yuan renminbi Reporting by Melanie Burton; Editing by Tom Hogue and Christian Schmollinger

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