May 30, 2018 / 3:44 AM / a year ago

METALS-Copper hits 3-week low as Italian crisis feeds risk aversion

 (Updates prices)
    By Manolo Serapio Jr
    MANILA, May 30 (Reuters) - London copper fell more than 1
percent to a three-week low on Wednesday, pressured by a firmer
dollar and as Italy's deepening political crisis pulled
investors out of risky assets.
    Along with copper, investors also sold off other commodities
from oil to grains as well as equities as Italy, Europe's
third-biggest economy, may call elections that could put leaders
in power who question the country's commitment to the European
Union and the euro currency. 
    "Markets worry that the upcoming election will ultimately
resemble a referendum on the euro ... resulting in an
existential crisis for the euro zone," Mizuho Bank said in a
    Three-month copper on the London Metal Exchange was
down 1.5 percent at $6,754.50 a tonne, as of 0702 GMT. Earlier
in the session, it hit $6,750.50, its weakest since May 8.
    Renewed trade tensions between the United States and China
also weighed on sentiment, after Beijing slammed Washington's
unexpected statement that it will press ahead with tariffs and
restrictions on investments by Chinese companies.
    * SHANGHAI COPPER: The most-traded July copper contract on
the Shanghai Futures Exchange dropped 1.5 percent to
close at the day's bottom of 50,780 yuan a tonne, a two-week
    * EURO: The dollar hovered near a 10-month high versus the
euro as Italy's political crisis raised the likelihood of an
early election. A stronger greenback makes dollar-denominated
assets costlier for holders of other currencies.
    * CHINA RESPONSE: China said it was ready to fight back if
the United States was looking to ignite a trade war, after
Washington said it can still go ahead in imposing tariffs on $50
billion of imports from China unless Beijing addresses the issue
of theft of American intellectual property. 
    * INDIA SMELTER: Vedanta Resources is working on a
legal challenge to an Indian state's closure of one of its
copper smelters, but it will not proceed until tensions over the
deaths of 13 people during protests last week have eased. 

    * COPPER SUPPORT: The absence of the Indian smelter cuts 1.7
percent of global copper supply and should support copper prices
in the short term, said Commonwealth Bank of Australia analyst
Vivek Dhar.
    "The smelter accounts for about 50 percent of India's copper
output and the smelter's closure will importantly mean that
India will need to import copper to meet domestic demand, Dhar
said in a note.      
    * ALUMINIUM PREMIUMS: Two global aluminium producers have
offered Japanese buyers a premium of $159 to $160 per tonne for
primary metal shipments for the July to September quarter, up
between 23 percent and 24 percent from the current quarter, four
sources directly involved in pricing talks said.
    * TIN: Shanghai tin settled 0.3 percent higher at
153,300 yuan a tonne, but well off the day's peak of 157,560
yuan, its loftiest since August, following a nearly
uninterrupted rally that began last week.
    * OTHER METALS: LME zinc fell 1.1 percent to $3,056
a tonne and nickel dropped 0.9 percent to $14,765, both
retreating after Tuesday's advance. 
    "Looking ahead, the increase in smelting capacity in China
and the reduction of auto import tariff in China are the
headwinds to zinc prices in our view," said Argonaut Securities
analyst Helen Lau. 
    * MARKETS: Asian shares extended a global selloff as Italy's
political crisis provoked a heavy retreat on Wall Street and
pushed up borrowing costs for the government in Rome.
 BASE METALS PRICES                                  0702 GMT
 Three month LME copper                                6754.5
 Most active ShFE copper                                50780
 Three month LME aluminium                               2262
 Most active ShFE aluminium                             14685
 Three month LME zinc                                    3056
 Most active ShFE zinc                                  23955
 Three month LME lead                                  2418.5
 Most active ShFE lead                                  19830
 Three month LME nickel                                 14765
 Most active ShFE nickel                               111650
 Three month LME tin                                    20530
 Most active ShFE tin                                  153260
 LME/SHFE COPPER                 LMESHFCUc3             54.38
 LME/SHFE ALUMINIUM              LMESHFALc3          -2239.25
 LME/SHFE ZINC                   LMESHFZNc3            496.67
 LME/SHFE LEAD                   LMESHFPBc3            588.28
 LME/SHFE NICKEL                 LMESHFNIc3          -1506.91
 (Reporting by Manolo Serapio Jr., Editing by Christian
Schmollinger and Sherry Jacob-Phillips)
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