October 1, 2018 / 10:06 AM / 2 months ago

METALS-Copper slides as nerves about Chinese demand surface

    * LME copper stocks below 200,000 tonnes, halved since March
    * LME aluminium stocks below 1 million, halved since Jan
2017
    * Worries about alumina shortages ease a touch

 (Updates with closing prices)
    By Pratima Desai
    LONDON, Oct 1 (Reuters) - Copper prices dipped on Monday
after weak manufacturing data from top consumer China caused
nervousness about demand, but falling inventories in London
Metal Exchange-approved warehouses helped support sentiment.
    Benchmark copper         on the LME closed down 0.1 percent
at $6,250 a tonne in official rings.
    "There's a tug of war going on between the Chinese data,
which shows manufacturing stalling, and copper stocks," a fund
manager at a natural resources fund said. "LME stocks have been
on a downtrend for some time, falling below 200,000 tonnes."

    CHINA: Growth in China's manufacturing sector stalled in
September as external and domestic demand weakened, two surveys
showed on Sunday, in a sign U.S. tariffs are inflicting a heavy
toll on the economy.             
    DEMAND: China accounts for nearly half of global demand
estimated at 24 million tonnes this year.
    STOCKS: Copper inventories in LME warehouses at 199,125
tonnes have nearly halved since late March and are at their
lowest since December last year. MCUSTX-TOTAL 
    WARRANTS: Cancelled warrants - material earmarked for
delivery - at more than 50 percent of total LME stock and a
concentration of warrants in the hands of a single entity are
also worrying for users of the exchange. One party currently
holds between 50 and 79 percent of copper warrants, data showed.
    SPREADS: Concern about nearby shortages on the LME market
have created a premium for the cash over the three-month
contracts in recent days. MCU0-3
    The premium, at around $6 a tonne, rose above $16 a tonne in
September from a discount of more than $40 in August.
    ALUMINIUM STOCKS: The market is also concerned about
aluminium stocks on the LME market, which at 987,800 tonnes have
more than halved since January last year and are at their lowest
since early 2008.
    ALUMINA: Unionised workers at aluminium producer Alcoa's
       Western Australian operations agreed on Friday to end a
strike that lasted more than six weeks after securing better job
security provisions in a new wage agreement.             
    This has eased concerns about alumina supplies, a key
ingredient for aluminium production. But ongoing output cuts at
a Norsk Hydro          alumina refinery in Brazil still mean
potential shortages.              
    Aluminium         ended up 1 percent at $2,083 a tonne.  
    ZINC: Operations at Trevali Mining Corp's                
Santander zinc mine in Peru have fully resumed after a road
blockade suspended delivery of supplies, the company said on
Friday.             
    ACTIVITY: Traders expect subdued activity this week due to
Chinese holidays.
    PRICES: Zinc         gained 1.7 percent to $2,656 from an
earlier $2,658, its highest since August 8. 
    Lead         fell 0.3 percent to $2,030.5, tin         rose
0.5 percent to $18,975 and nickel         fell 0.7 percent to
$12,510 a tonne.

    
 (Reporting by Pratima Desai; Editing by Dale Hudson)
  
 
 
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