Copper eases as China tightens property screws

By Nick Trevethan

SINGAPORE (BestGrowthStock) – London copper continued to edge lower on Friday, dragging Shanghai futures with it, undermined by fears China’s steps to cool the property market may slow construction investment and demand for metals.

China raised mortgage rates and down payment requirements in a series of steps to make it harder, and more expensive, for people to take out mortgages on investment properties. Owner-occupiers buying larger homes are also targeted.

But U.S. manufacturing data offered some encouragement, analysts said, despite a soft weekly jobless report.

“U.S. manufacturing was solid within a fairly steady industrial output number. Initial jobless claims were up but they are volatile. All in all the data was positive,” said David Moore, commodities strategist at Commonwealth Bank of Australia.

“The move in property will cool, but from a very hot starting point, and it won’t slow the urbanization trend so there isn’t really any reasons to be that bearish on metals.”

The number of U.S. workers filing new claims for jobless aid soared last week as a backlog from the Easter holiday was processed, while U.S. industrial output rose less than expected in March.

But a gauge of manufacturing in New York state rose to a six-month high in April and factory activity in the mid-Atlantic region that month was at its highest level since December, according to reports from regional Federal Reserve banks.

Three-month copper on the London Metal Exchange fell $20 to $7,925 by 3 a.m. EDT, extending a modest $5 loss in the previous session.

Shanghai copper fell 240 yuan to 62,350 yuan.

“The feeling I am getting is investors are near the top of their risk threshold and it wouldn’t take much to trigger some downsizing of positions,” a trader in Singapore said.

“Investors are uneasy with copper in particular this high and are shifting attention to aluminum and nickel. Nickel has done a lot already this year, but there is some warming toward aluminum.”

LME aluminum fell $14 to $2,469, having touched $2,487 in the previous session, its highest since September 2008, buoyed by steady outflows of metal from LME warehouses and plans by banks, trading houses and Russian producer UC RUSAL to quarantine millions of metric tons of metal in exchange traded funds.

Nickel, the market’s star performer in 2010 with a 48 percent rally, traded at $27,100 a metric ton, having touched $27,400, a near-two-year high earlier, supported by worries about supply and a 1,428 metric ton draw on stocks overnight.

“Nickel stock moves are a support and with canceled warrants still high it suggests more to come,” Moore said.

“Stainless demand is up and International Nickel Study Group data showed the market in a small deficit in January and February, consistent with the story that nickel has been affected by supply disruptions.”

Base metals prices at 3 a.m. EDT

Metal Last Change Pct Move End 2009 YTD pct chg

LME Cu 7925.00 -20.00 -0.25 7375.00 7.46

SHFE Cu* 62350.00 -240.00 -0.38 59900.00 4.09

LME Alum 2469.00 -14.00 -0.56 2230.00 10.72

SHFE Alum* 17030.00 -60.00 -0.35 17160.00

-0.76

COMEX Cu** 359.00 -0.50 -0.14 332.75 7.89

LME Zinc 2508.00 -1.00 -0.04 2560.00

-2.03

SHFE Zinc 19615.00 150.00 +0.77 21195.00

-7.45

LME Nickel 27100.00 -125.00 -0.46 18525.00 46.29

LME Lead 2344.00 4.00 +0.17 2432.00

-3.62

LME Tin 19100.00 130.00 +0.69 16950.00 12.68

LME/Shanghai arb^ 939

Dollar/yuan 6.8256 6.8258

** 1st contract month for COMEX copper

* 3rd contact month for SHFE aluminum, copper and zinc

^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE third month

Stock Market Report

(Editing by Himani Sarkar)

Copper eases as China tightens property screws