Copper hits nine-month low on weak demand

Tag : lead,copper
United Kingdom - * Copper touches lowest point since Dec. 21, 2007
* CTA selling and firm U.S. dollar push commodities lower
* Aluminium inventories in LME warehouses continue to rise
(Updates with lead price fall)
By Anna Stablum
LONDON, Sept 29 (Reuters) - A firm dollar dragged down base metalprices on Monday with copper touching a nine-month low as investorsawaited a vote by the U.S. Congress on the creation of a$700-billion government fund to buy bad debt.
"It's the dollar," said analyst Leon Westgate at Standard Bank,explaining why prices were falling.
He said the market was focusing on sluggish demand for industrialmetals from the United States and Europe, and said that even ifcopper's top consumer, China, was still doing relatively well, itsfuture looked uncertain.
"It is now up to the Chinese and it depends on how badly theireconomy has been impacted by this downturn," he said.
The Shanghai Futures Exchange will be shut this week for NationalDay holidays.
Three-month copper on the London Metal Exchange was down at $6,625a tonne at 0954 GMT compared with $6,775 at the close on Friday.Copper earlier hit $6,610 -- its lowest level since Dec. 21, 2007and down 2.4 percent on the day.
"We believe industrial metal prices will remain under pressure inan environment of global growth downgrades and skittish equitymarkets," Deutsche Bank (nyse: DB - news - people ) said in a daily report.
The dollar rose versus the euro as the banking crisis worsened inEurope and amid optimism that a vote on a $700 billion bailout torescue the U.S. financial system is near.
The proposal will be sent to Congress later on Monday after days oftense negotiations.
A firm U.S. currency makes dollar-priced metals and othercommodities more expensive for holders of other currencies.
"CTA (Commodity Trading Advisor) selling, combined with thestrengthening dollar is enough to make things look a little bitcheesy -- a bit ugly," said an LME trader.
Lead and zinc dropped sharply as investors sold off baskets ofcommodities with gold, oil and most other commodities were tradingin negative terrain.
Lead fell 5.4 percent to a low of $1,855 a tonne before trading at$1,870, down $90 against Friday's close.
Three-month zinc touched $1,705 a tonne, down 3.7 percent, beforebeing indicated at $1,726, down $44.
Lead and zinc have lost around a quarter and nickel has shed 35percent since the start of the year.
Nickel was down $350 to $16,650 and aluminium fell 1 percent or $25to $2,469.
Aluminium stocks continued to rise, up 2,200 tonnes, climbing above1.37 million tonnes for the first time since early 2004, enough for13 days of world consumption.

WEAK DEMAND OUTLOOK
LME copper stocks fell 1,250 tonnes, down for the six straight dayas material left warehouses, but at 198,925 tonnes, stocks arestill two-thirds higher than in mid-June and enough for just underfour days of world consumption.
Analyst assessments of weak Chinese demand growth, particularly inthe domestic housing and auto industries and across the widerexport sector, also weighed on the market.
"Our most pressing concern is to what extent the U.S. virus spreadsglobally and specifically to China," said Deutsche Bank in itsquarterly report.
China will represent more than 40 percent of global commoditydemand growth for nickel, copper and aluminium in 2009, theinvestment bank said.
Tin traded lower at $17,775 a tonne versus $18,100/18,105 onFriday.
Metal Prices at 0957 GMT Metal Last Change Percent Move End 2007Ytd Percent
move LME Cu 6635.00 -140.00 -2.07 6670.00 -0.52 SHFE Cu* 53360.00-80.00 -0.15 56880.00 -6.19 LME Alum 2469.00 -25.00 -1.00 2403.002.75 SHFE Alu* 15620.00 110.00 +0.71 18180.00 -14.08 COMEX Cu**300.00 -8.50 -2.76 303.50 -1.15 LME Zinc 1726.00 -44.00 -2.492370.00 -27.17 SHFE Zinc* 14240.00 -25.00 -0.18 18950.00 -24.85 LMENick 16650.00 -350.00 -2.06 26350.00 -36.81 LME Lead 1865.00 -95.00-4.85 2550.00 -26.86 LME Tin 17775.00 -325.00 -1.80 16400.00 8.38** 1st contract month for COMEX copper * 3rd contact month for SHFEAL, CU and ZN SHFE ZN began trading on 26/3/07
(Additional reporting by Nick Trevethan; editing by ChristopherJohnson) Copyright 2008 Reuters, Click for Restriction