By Melanie Burton
SINGAPORE, Feb 18 (Reuters) - Copper fell on Monday as
traders played catch up after a week-long holiday in China, with
metals weighed down by signs of weaker global growth including a
deeper-than-expected recession in the euro zone.
There were mixed signals from China, as the top metals
consumer returns from its Lunar New Year break on Monday.
Shanghai copper futures fell more than 1 percent, but
Shanghai-based traders were also buying from bonded stock.
The most-traded May copper contract on the Shanghai Futures
Exchange had fallen 1.12 percent to 59,060 yuan
($9,500) a tonne by 0322 GMT. It earlier hit its lowest since
Jan. 30 at 58,980 a tonne.
Three-month copper on the London Metal Exchange
dropped 0.49 percent to $8,167 a tonne, from the previous
session when it closed down 1 percent from the week before.
'China's overall economy is still strong, so the appetite
for base metals after Chinese New Year will gradually pick up,'
said Helen Lau, senior commodity analyst at UOB-Kay Hian in Hong
China accounts for 40 percent of refined copper demand, with
Lau saying strong and steady growth in the country's
construction sector would underpin metals this year. Although
she added that significant upside is unlikely as a roaring pace
of growth has dropped back.
'People should not view consolidation as the start of a
weaker trend from here -- instead we would recommend it as a
chance to get in.'
London copper hit a 4-month-peak of $8,346 in early February
but has since struggled to gain traction. Traders hope that
China's return to the market this week could help set a floor
The Group of 20 nations declared on Saturday there would be
no currency war and deferred plans to set new debt-cutting
targets, underlining broad concern about the fragile state of
the world economy.
Meanwhile, U.S. manufacturing got off to a weak start this
year as motor vehicle output tumbled in January, but a regional
rebound in factory activity suggested any setback would be
Also continuing to drag on metals prices was news that the
euro zone slipped deeper than expected into recession in the
last three months of 2012 after its largest economies, Germany
and France, shrank at the end of a wretched year for the region.
Traders reported selling of copper futures but purchases of
metal from bonded Shanghai inventories which are teetering near
record highs above 1 million tonnes.
'Many Chinese were long or reluctant to short in pre-Lunar
New Year trade as we've seen westerners pulling the market
higher to squeeze Chinese shorts in last few years,' a
Shanghai-based trader said.
'Now, bears are more confident to short on the almost
unchanged price during the holiday,' he added.
Another trader said that a comfortable market contango --
where futures prices are higher than front month prices -- had
fuelled demand for physical copper for financing.
Prices for copper in bond edged up around $5 to $55 from
before the break, the traders said.
Base metals prices at 0322 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8167.00 -40.00 -0.49 3.00
SHFE CU FUT MAY3 59060 -670 -1.12 2.39
HG COPPER MAR3 370.90 -2.80 -0.75 1.55
LME Alum 2151.25 -15.75 -0.73 3.87
SHFE AL FUT MAY3 15180 -30 -0.20 -1.08
LME Zinc 2161.00 -14.00 -0.64 4.72
SHFE ZN FUT MAY3 15780 235 +1.51 1.51
LME Nickel 18136.00 -239.00 -1.30 5.72
LME Lead 2425.00 -8.00 -0.33 3.63
SHFE PB FUT 15470.00 -25.00 -0.16 1.44
LME Tin 24800.00 0.00 +0.00 5.98
LME/Shanghai arb^ 754
Shanghai and COMEX contracts show most active months
($1 = 6.2325 Chinese yuan)
(Editing by Muralikumar Anantharaman and Joseph Radford)
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