Copper hits 6-mth low, all base metals down

Tag : base metals
United Kingdom - * Base metals down on demand worries, firmer dollar
* Nickel falls 5.8 percent on profit-taking after rally
* Lead drops 7.7 percent to two-week low

(Adds comment, closes prices)
By Anna Stablum
LONDON, Aug 8 (Reuters) - Copper futures hit six-month lows onFriday and all the industrial metals were lower as a soft demandpicture and firmer dollar dampened sentiment.
Nickel, which was also pushed lower on profit-taking, declined 5.8percent, zinc dropped 4.4 percent to a 2-1/2-year low, lead fell asmuch as 7.7 percent to a two-week low and tin was down 6.1 percentto a five-month low.
"There is a mass re-allocation of assets. People are selling offcommodities and moving back into the U.S. dollar," said DanielHynes, analyst at Merrill Lynch (nyse: MER - news - people ).
Copper for delivery in three months on the London Metal Exchangefell to $7,350 a tonne, its lowest since Feb 7, and prices havelost 18 percent of their value on demand concerns since reaching arecord high of $8,940 on July 2.
The metal, used in the construction and power industries, closed at$7,410 a tonne from $7,665 on Thursday.
"The dollar is driving metals lower," analyst John Meyer at FairfaxInvestment Bank.
"There are expectations of a worsening economic environment. We arenow seeing Japan heading into recession and a Japanese recessioncould pull down other Asian economies," he said.
Lead hit a two-week low of $1,960.5, before closing at $1,974 tonnedown from Thursday's last quote of $2,124/2,125.
Zinc dropped to $1,663, the lowest since November 2005, fromThursday's $1,740. It was last quoted at $1,685.0/1,687.0/1.
The dollar rose to a seven-month high against the yen, helped by asteep decline in oil prices that boosted U.S. stocks.
"The dollar is key ... the metals look appalling at the moment --and outlook is bearish," an LME floor dealer said.
A firm U.S. currency makes dollar-priced metals expensive toholders of other currencies and tend to weigh on prices.
Nickel, mainly used in stainless steel, closed at $18,050 a tonne,after hitting an intra-day low of $17,749, from $18,850 onThursday. Earlier this week prices hit $17,370 -- the lowest levelsince June 2006. Nickel has lost two thirds of its value since itsrecord high of $51,800 last May and prices have dropped more than30 percent in 2008 on weaker demand from stainless steel producers.
In the previous session, nickel jumped 6 percent on technicalbuying as investors covered their short positions.

DOOM AND GLOOM
On Thursday, Japan cut its view on the economy, dropping the word"recovery" for the first time in nearly five years, as high rawmaterial costs and a global slowdown push the world's No.2 economytowards a recession.
"The global economic outlook is worsening ... I see some furtherdownward pressure on copper," Meyer said, adding there could be apick up in demand at the end of August or in September.
Lower ore grades and some closures of old mines plus relatively lowstocks around the world would also keep prices underpinned andprevent a collapse, he said.
LME warehouse stocks stand at 150,875 tonnes -- levels last seen inFebruary -- enough for 3 days of global consumption.
Copper stocks in Shanghai fell 14.5 percent last week to 31,509tonnes in data released after the market closed, in line withexpectations.
Aluminium declined to $2,850 from $2,918. Tin slumped as low as$19,200 and was last quoted at $19,000/19,050 against$20,450/20,475.
For a chart showing world copper stocks click:https://customers.reuters.com/d/graphics/GLBCPSTX080808.gif MetalPrices at 1614 GMT Metal Last Change Percent Move End 2007 YtdPercent
move LME Cu 7400.00 -265.00 -3.46 6670.00 10.94 SHFE Cu* 58970.00-570.00 -0.96 56880.00 3.67 LME Alum 2850.00 -68.00 -2.33 2403.0018.60 SHFE Alu* 18770.00 -75.00 -0.40 18180.00 3.25 COMEX Cu**339.20 -6.60 -1.91 303.05 11.93 LME Zinc 1680.00 -60.00 -3.452370.00 -29.11 SHFE Zinc* 14340.00 -215.00 -1.48 18950.00 -24.33LME Nick 18100.00 -750.00 -3.98 26350.00 -31.31 LME Lead 1975.00-90.00 -4.36 2550.00 -22.55 LME Tin 19000.00 -1100.00 -5.4716400.00 15.85 ** 1st contract month for COMEX copper * 3rd contactmonth for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Julie Crust; editing by Peter Blackburn) Copyright 2008 Reuters, Click for Restriction