Lme Copper Slips In Pre-Market

Copper prices were seen coming under further pressure after falling under $1,700 support early yesterday.

London Metal Exchange (LME) copper was driven to a low of $1,696 in early trade on weakness in the Shanghai contract, traders said. At 0921 GMT copper was at $1,703, $37 lower than Friday's afternoon kerb close.

"Shanghai was down overnight and the Chinese came in as buyers rather than sellers," said a dealer, adding that $1,650 - the lowest since February - was the next likely target.

Falling economic growth and rising imports have caused the spot price of copper in Shanghai to slump through 17,000 yuan ($2,048) from a high in April above 19,000 yuan, according to analysts and traders.

Support for the LME price was found in the $1,700/$1,710 area as trade interest perked up, but funds were expected to continue pushing the market lower.

Stocks were down 2,750 tonne, much from Spain as expected,but analysts noted that the number of cancelled warrants - representing material due to be shipped out of warehouses - had also diminished.

Tin was the sole gainer in otherwise quiet pre-market trade and prices were seen moving up. The market rose $70 to $5,940 before drifting off to $5,910/$5,930 and the cash/threes backwardation widened to $105/$115.

Aluminium slid $4 to $1,366 and analysts said they expected $1,350 then $1,305 - the 19-month low - to be the next targets. Nickel lost $90 to $4,890, which was taken as a bearish sign by analysts, despite indications showing that the market was oversold.

Zinc lost $6 to $1,069 while lead was $2 easier at $547. Both were seen falling on support, at $1,050 and $540 respectively, analysts said. Alloy fell $7 to $1,263/$1,270.

Meanwhile, tin is expected to have another stab at the upside this week, while other metals are seen mixed, analysts said yesterday. It was expected to meet resistance at $6,000 a tonne after hitting $5,940 early yesterday.

"My guess would be further upside potential...nothing's changed fundamentally," said Alan Williamson, senior commodities analyst at Deutsche Morgan Grenfell Australia.

A slight retracement was possible before the rally resumed, and the upside would be capped, he added. "Above $6,000 could bring selling from China and a lot of producers could bring back idled capacity."