Business

Thu May 29 20:16:26 PDT 2008

(Adds comments, updates prices)

By Anna Stablum

LONDON, May 29 (Reuters) – Copper, zinc and lead eased on Thursday on rising London Metal Exchange stocks and waning demand.

Lead and zinc fell almost 5 percent while tin shed 5.7 percent as stops were triggered when the metal broke key resistance levels, traders said.

"Rising stocks are just a symptom of weaker demand and improving supply," analyst David Thurtell at BNP Paribas said.

Copper for delivery in three months broke below key support level at $8,000 a tonne to trade at $7,950/7,960, down $145 or 1.8 percent at 1114 GMT, after losing 1.2 percent in the previous session.

Stocks rose by 600 tonnes to 126,400 tonnes, and are up around 15 percent in a month on sluggish demand for copper, mainly used in the construction and power sectors.

Lead and zinc continued to suffer from rising LME inventory levels, up by over 40 percent since the start of the year.

Lead hit an intraday low of $1,930, down 4.8 percent, before trading at $1,935/1,940, with stocks up another 1,550 tonnes to 65,125.

Three-months zinc traded at $2,035/2,040, down $85, after falling 4.2 percent — touching a low of $2,030.

"People are a bit scared to buy short-term because they are really quite worried about how much stock may come on to the market," analyst Michael Jansen at JP Morgan said.

Tin, this year’s top performer up by over 40 percent, was indicated at $22,300/22,500, down $1,300 or 5.5 percent from Wednesday.

Nickel lost momentum after trading in positive terrain earlier in the session, with prices down over 20 percent in the past month on sluggish demand from stainless steel producers.

Nickel fell to $21,900/22,000 a tonne, down $600, after shedding 3.4 percent in the previous session.

"It is such a significant decline from the recent range that had been established for some time of $26,000-32,000," JP Morgan’s Jansen said, adding the market would consolidate here.

The metal has fallen by nearly 15 percent so far this year as stainless steel producer demand, accounting for some 70 percent of the global nickel offtake, has disappointed.

The rise in copper stocks kept prices down.

"The buying that everyone has been looking for, in the form of Chinese imports, is just not there at these levels. The price must probably come down towards $7,800-$7,900 to trigger some decent commercial interest," JP Morgan’s Jansen said.

Dealers watched the dollar, which clung to gains made in the previous session after stronger-than-expected U.S. durable goods orders eased concerns about the U.S. economy outlook.

The euro eased to $1.5565 against the dollar from $1.5641 late in New York.

"The dollar strength is not helping prices," Thurtell said.

Dealers said they would watch the preliminary U.S. first quarter Gross Domestic Product (GDP) data and jobless claims at 1230 GMT for clues about the health of the U.S. economy. A firmer U.S. currency makes dollar-priced metals more expensive for other currency holders and tends to cap prices.

Aluminium eased $45 to $2,915/2,925 a tonne.

Aluminium’s longer-term outlook remained positive, analysts said, despite more than a million tonnes of metal sitting in LME warehouses, with prices supported by high energy prices and the risk smelter capacity expansion will outpace power supplies.

Metal Prices at 1050 GMT Metal Last Change Percent Move End 2007 Ytd Percent

move LME Cu 7950.00 -145.00 -1.79 6670.00 19.19 SHFE Cu* 61460.00 -1010.00 -1.62 56880.00 8.05 LME Alum 2935.00 -25.00 -0.84 2403.00 22.14 SHFE Alu* 18945.00 -160.00 -0.84 18180.00 4.21 COMEX Cu** 364.50 -7.90 -2.12 303.50 20.10 LME Zinc 2055.00 -65.00 -3.07 2370.00 -13.29 SHFE Zinc* 17120.00 -540.00 -3.06 18950.00 -9.66 LME Nick 22150.00 -350.00 -1.56 26350.00 -15.94 LME Lead 1940.00 -88.00 -4.34 2550.00 -23.92 LME Tin 0.00 -23600.00 -100.00 16400.00 -100.00 ** 1st contract month for COMEX copper * 3rd contact month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07

(Additonal reporting by Nick Trevethan in Singapore, editing by Peter Blackburn)

Provided by Reuters

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