News: METALS-Copper, aluminium drop on weak rise in Chinese home prices

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    • Slowing China home price rises adds to doubts about economy
    • Copper falls as stronger dollar also weighs on commodities
    • Nickel, zinc buck weaker trend as speculators keep buying

    (Adds details, quotes; changes dateline from SINGAPORE)

    Copper and aluminium dropped on Monday for a second session after lacklustre rises in Chinese home prices fuelled worries about demand in the world's top metals consumer.

    Data on Monday showed home price rises in China slowed in June for a second straight month, adding to fears that a construction-led rebound in the economy may not be sustainable.

    "This slowing increase in Chinese house prices we've seen over the weekend puts the focus back on the medium to longer term issues which is oversupply in the real estate market," said analyst Carsten Menke at Julius Baer in Zurich.

    Benchmark copper, mainly used in the construction and power sectors, on the London Metal Exchange CMCU3 slid 0.8 percent to $4,879 a tonne by 1015 GMT. The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 closed 1.5 percent down at 37,850 yuan ($5,650.86) a tonne.

    Copper had rallied 12 percent from mid-June to mid-July, topping out at $5,032 last week, partly on hopes for more stimulus from Chinese authorities.

    "This euphoria that we've seen in the steel and iron ore markets is clearly fading again based on the (home price) data and you have some spill over in copper and aluminium," Menke added.

    Chinese steel-related commodities futures dived on Monday, erasing last week's rally as investors felt the previous gains outpaced physical demand for steel in China.

    Three-month LME aluminium CMAL3 dipped 0.2 percent to $1,656 a tonne.

    A stronger U.S. dollar, especially versus the yen, also weighed on metals markets, making commodities priced in the U.S. currency more expensive to buyers using other currencies.

    "The price action today is more to do with investors taking profit and a stronger dollar weighing on prices," said Chunlan Li, an analyst at CRU in Beijing. "There is not much change in the fundamental situation, it is summer season and demand seasonally low."

    Zinc and nickel, however, managed to remain in positive territory, as speculators continued their buying spree, with concern about possible shortages in the two metals outweighing the macro-economic worries.

    LME zinc CMZN3 added 0.3 percent to $2,211.50 and nickel CMNI3 also gained 0.3 percent to $10,300 a tonne.

    Broker Marex Spectron said in a note that their speculative positioning estimates showed the long in nickel on the LME had climbed to heights not seen since July 2014.

    Nickel, however, was still the second largest speculative long of the LME complex after zinc, Marex added in a note.

    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 
    ($1 = 6.6981 Chinese yuan) 
    
 
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