METALS-Copper Closes Below $8,000/T, Data in Focus

NEW YORK/LONDON, Sept 27 (Reuters) - Copper ended easier on Monday, as prices took a breather from September's rally, but analysts expected upside momentum to return and looked to upcoming data releases to either fuel the break or reversal from the $8,000 (per tonne) ceiling.

"I think it is just consolidating a little bit here," said Justin Lennon, base metals analyst with Mitsui Bussan Commodities (U.S.A.) Inc.

"It's made a really strong base below here and it has moved up nicely last week ... it's just a pause," he said.
 
Copper for December delivery HGZ0 dipped 2.10 cents to end at $3.5970 per lb on the COMEX metals division of the New York Mercantile Exchange, after dealing from $3.5880 to $3.6440, which marked a new high for the fourth position futures contract dating back to mid-April.
 

On the London Metal Exchange (LME), benchmark copper for three-months delivery CMCU3 ended down $35 at $7,910 a tonne, near its session peak at $7,986, which was just shy of last week's five-month high of $7,990.
 

Since the start of the month, prices of the industrial metal have rallied more than 7 percent, driven by expectations of further downward pressure on the U.S. dollar, falling inventory levels and an improved fourth-quarter demand outlook. [USD/]
 
"The commodities complex as a whole has benefited from this recent bout of dollar weakness. Clearly copper is getting close to that $8,000 level where we got to in April," said analyst Dan Major at RBS.
 

Market expectations of supply tightness have narrowed the contango between the cash and the three-month copper contract to near zero from about $28 a tonne in early August. MCU0-3 

"There has been some good inventory outflow out of the COMEX over the last few weeks," Mitsui's Lennon said. "Demand is forcing people to secure some spot cathode in the market."

LME copper inventories fell another 2,100 tonnes on Monday to 378,125, their lowest level since last November, down nearly one-third from a six-year high hit in February.

COMEX copper stocks saw a hefty 1,111 short tons leave warehouses on Friday, leaving levels at their lowest since late November.
 
"We are still at the top of that trading range. I think we need to get some decent data surprises to the upside for us to break through the $8,000 mark," Major added.
 
The market waiting for surveys of purchasing managers in the manufacturing sector next week.
 
DISCOUNT
 
The discount in Shanghai copper to LME copper shot up to 1,546 yuan compared with 544 yuan last Tuesday, pushing Asian buyers away from the London market.
 
"There may have been selling overnight because of a closed arbitrage but the overall theme is still the same in that you've got relatively healthy demand from countries like China (and) supply for copper is growing at a slower pace than demand," said Merrill Lynch analyst Michael Widmer.
 
He added that while lackluster economic growth in developed countries was a concern, the chances of a double-dip global recession have lessened while developing nations, which are key to metals demand, are faring well.
 
Among other industrial metals, aluminum CMAL3 ended down $24 at $2,293 a tonne, lead CMPB3 shed $27 to $2,269, and zinc CMZN3 sank $41 to $2,207.
 
Tin CMSN3 rose $50 to finish at $23,650 and nickel CMNI3 gained $175 to $23,050.
 
Metal Prices at 1835 GMT
 
COMEX copper in cents/lb, LME prices in $/T and SHFE prices in
yuan/T
 Metal            Last      Change  Pct Move   End 2009   Ytd Pct
                                                         move
 COMEX Cu       359.80       -2.00     -0.55     334.65      7.52
 LME Alum      2277.00      -40.00     -1.73    2230.00      2.11
 LME Cu        7900.00      -45.00     -0.57    7375.00      7.12
 LME Lead      2260.00      -36.00     -1.57    2432.00     -7.07
 LME Nickel   23050.00      175.00     +0.77   18525.00     24.43
 LME Tin      23550.00      -50.00     -0.21   16950.00     38.94
 LME Zinc      2200.00      -48.00     -2.14    2560.00    -14.06
 SHFE Alu     15930.00      205.00     +1.30   17160.00     -7.17
 SHFE Cu*     60600.00      770.00     +1.29   59900.00      1.17
 SHFE Zin     17950.00      145.00     +0.81   21195.00    -15.31