Copper slides, China growth data weighs on sentiment
* Premium for cash over 3-month tin still elevated
* Tin stocks about one-third of December levels
(Updates with closing prices)
By Pratima Desai
LONDON, Jan 21 (Reuters) - Copper prices fell on Monday as
worries about demand in top consumer China were reinforced after
data showed weaker economic growth and on expectations of
slowing activity ahead of the Lunar New Year holiday.
Benchmark copper on the London Metal Exchange ended
down 1.2 percent at $5,981 a tonne. Prices of the metal used
widely in power and construction touched a three-week high of
$6,077 a tonne last week.
"Everything comes to a halt in the run-up to and during the
Chinese New Year break, that softens the market," Macquarie
analyst Vivienne Lloyd said.
"Damage to copper prices from the (U.S.-China) trade war has
been priced in, so any sort of rapprochement would be bullish."
GROWTH: China's economy cooled in the fourth quarter under
pressure from faltering domestic demand and bruising U.S.
tariffs, dragging 2018 growth to 6.6 percent, the lowest in
nearly three decades.
With support measures expected to take time to kick in, many
believe conditions are likely to worsen before they get better,
and see a further slowing to 6.3 percent this year.
HEALTH: "China remains an important determinant of how
healthy the copper market is. While the government has extended
fiscal and monetary stimulus, the support has so far been
cautious," BofAML analysts said in a note.
"In our view this is unlikely to change for various reasons.
Most notably, rebalancing the economy towards services/
knowledge-intensive sectors makes many of the traditional
stimulus tools less effective."
HOLIDAY: The Lunar New Year break runs from Feb. 4-8, but
many factories close the week before.
TRADE: The United States is pushing for regular reviews of
China's progress on pledged trade reforms as a condition for a
trade deal - and could again resort to tariffs if it deems
Beijing has violated the agreement.
TECHNICALS: Support for copper stands around $5,950 a tonne,
the 21-day moving average. Resistance is at $6,080, where the
55-day moving average currently sits.
TIN: Concern about nearby supplies of tin on the LME market
have created a large premium above $100 a tonne for the cash
over the three-month <CMSN0-3> contract.
STOCKS: Tin stocks in LME-approved warehouses at 1,090
tonnes are about a third of the level in December and large
holdings of tin warrants and cash contracts are behind the
Three-month tin closed up 0.2 percent at $20,650 a
tonne, close to the seven-month high of $20,770 a tonne hit last
PRICES: Aluminium <CMAL0-3> fell 1.0 percent to $1,852 a
tonne, zinc rose 0.3 percent to $2,588, lead was
untraded at the close, but bid up 0.7 percent to $2,012 and
nickel slipped 0.2 percent to $11,800 a tonne.
(Reporting by Pratima Desai; editing by Alexander Smith and
First Published: 2019-01-21 03:47:07
Updated 2019-01-21 19:27:45
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