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METALS-Copper sinks to 3-week low on profit-taking, demand angst

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  1. Trucks carrying copper and other goods are seen waiting to enter an area of the Shanghai Free Trade Zone, in Shanghai September 24, 2014.
    • LME/ShFE arb: http://bit.ly/2wZSAEz
    • Discount for cash over 3-month copper hits highest since 2009
    • Nickel slides on talk of higher supplies from Indonesia

    (Recasts, adds comment, changes dateline from Sydney)

    Copper prices fell to three-week lows on Wednesday on profit-taking, rising stocks in London Metal Exchange warehouses and nervousness about demand in China.

    Benchmark copper CMCU3 on the LME was down 1.5 percent at $6,569 a tonne at 1014 GMT from an earlier $6,558, its lowest since Aug. 23. But prices are up around 19 percent so far this year, partly due to a speculative frenzy in July and August.

    "It looks like profit-taking, we could see more of this before it settles," Capital Economics senior commodities economist Caroline Bain said.

    "China demand has surprised a little on the upside, but looking more closely at the data, construction has been contracting, that will drag on demand."

    SPECULATORS: LME data shows funds' net long copper position at 71,827 lots, or more than 1.8 million tonnes, is down from a peak of 78,527 lots late in August but still near its highest since last December. LME-CA-MNET

    TECHNICALS: Traders said a break below support at $6,615, a Fibonacci retracement levels, after the release of LME stocks data accelerated the sell-off. The next support level is in around $6,500, an area of congestion in August.

    STOCKS: Copper stocks in LME approved warehouses are up 38,150 tonnes at 246,575 tonnes since last week.

    DISCOUNT: Higher stocks and worries about an oversupplied copper market helped push the discount for the cash over the three-month contract MCU0-3 to above $40 a tonne, its highest since Dec. 2009. Traders say this suggests more metal will be delivered over coming days.

    CONSTRUCTION: China new property construction starts fell 7 percent in July year-on-year, the first fall since last September. Real estate investment in China rose 7.9 percent in the January-July period from the same period a year earlier, easing from 8.5 percent in the first half of this year.

    DATA: Base metals markets are looking ahead to data from China on new loans, investment and industrial production due this week for clues as to the strength of demand over coming months. ECONCN

    ZINC STOCKS: Stocks of zinc in LME warehouses are up 25,250 tonnes at 267,050. A small premium for the cash over the three-month contract CMZN0-3 on Sept. 4 has over the last week turned into a $5 a tonne discount.

    ZINC PRICE: Three-month zinc CMZN3 was down 0.4 percent at $3,049. It has come under pressure in recent weeks on expectations that high prices would mean mothballed capacity could be restarted.

    ELSEWHERE: Aluminium CMAL3 was down 0.6 percent at $2,125, lead CMPB3 fell 0.4 percent to $2,295 and tin CMSN3 slipped 0.1 percent to $20,655.

    NICKEL: Nickel CMNI3 lost 3.3 percent to $11,590 on talk of higher supplies from Indonesia, a top exporter.

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    Top base and precious metals analysis - GFMS     http://tmsnrt.rs/2lvmIzW 
    

    LME/ShFE arb: http://bit.ly/2wZSAEz

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