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METALS-Copper slips, but China optimism and supply fears support

Published 18/02/2017, 04:18 am
© Reuters.  METALS-Copper slips, but China optimism and supply fears support
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* Copper market focus moves to China's manufacturing data

* Freeport-McMoRan calls force majeure at Indonesia's Grasberg

* Nickel down, but supply worries fuel gains since late Jan. (Adds closing prices)

By Pratima Desai

LONDON, Feb 17 (Reuters) - The price of copper slid on Friday as a failure to sustain levels above $6,000 a tonne triggered profit-taking, although a prospect of strong demand from top consumer China and supply disruptions are expected to support prices.

Benchmark copper CMCU3 on the London Metal Exchange closed down 0.7 percent at $5,960 a tonne. Prices hit a 21-month high of $6,204 on Monday.

Traders said a disappointment with copper's performance since Monday had persuaded many betting on higher prices to cut back their holdings.

Reinforcing the idea of a pick-up in Chinese demand was new loans data; banks extended 2.03 trillion yuan ($295 billion) in net new yuan loans in January, the second-highest monthly tally on record. say much of that cash has gone into manufacturing, suggesting higher demand to come for industrial metals.

"It is very possible we see higher prices. It will depend on data over the next few months, particularly from China," said Liberum analyst Ben Davis.

The focus will be on fixed-asset investment, industrial production, surveys of purchasing managers in manufacturing and property market indicators in China.

A strike at BHP Billiton's BHP.AX , BLT.L Escondida in Chile, the world's largest copper mine, has boosted sentiment as has an output halt at Freeport-McMoRan's FCX.N giant Grasberg mine in Indonesia. on Friday declared force majeure at Grasberg, saying it could not meet contractual obligations on copper concentrate shipments. Exports had already been suspended for more than a month due to a government export ban. ongoing supply-side issues and a sizable speculative long the price action should remain volatile," Marex Spectron analysts said in a note. "The key levels to watch are $5950-30 and $6190-6210 with plenty of whipsaw price action in between."

Elsewhere, three-month nickel CMNI3 ended 0.2 percent down at $11,050 a tonne, just below Thursday's two-month peak of $11,070.

It has climbed more than 15 percent since late January on concern about ore supplies from the Philippines which this week ordered the cancellation of 75 mineral production-sharing agreements, as developing them would threaten water supplies.

That came after the closure or suspension of 28 of the country's 41 mines. two thirds of global demand, estimated at around 2 million tonnes this year, is accounted for by stainless steel mills, mainly in China.

Aluminium CMAL3 closed down 0.9 percent at $1,880 a tonne and zinc CMZN3 fell 1.7 percent to $2,810. Lead CMPB3 was 1.1 percent lower at $2,252, while tin CMSN3 finished up 0.3 percent at $19,725 a tonne.

PRICES

Three month LME copper

CMCU3

Most active ShFE copper

SCFcv1

Three month LME aluminium

CMAL3

Most active ShFE aluminium

SAFcv1

Three month LME zinc

CMZN3

Most active ShFE zinc

SZNcv1

Three month LME lead

CMPB3

Most active ShFE lead

SPBcv1

Three month LME nickel

CMNI3

Most active ShFE nickel

SNIcv1

Three month LME tin

CMSN3

Most active ShFE tin

SSNcv1

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