Growth worries drag copper to 7-week low

Reuters - Copper hit its lowest in seven weeks on Monday, hurt by concerns about top consumer China's economic slowdown and its shadow banking sector, coupled with expectations the U.S. Federal Reserve will scale back its bond buying further.

Limiting losses, however, daily London Metal Exchange (LME) data showed copper stocks continue to dwindle, falling to a year low of 325,400 tonnes, with metal earmarked to leave warehouses accounting for 61 percent of that total. <MCUSTX-TOTAL>

Also helping, hedge funds and money managers raised their net long or buy positions in copper in the week to Jan. 21, data from the U.S. Commodity Futures Trading Commission showed late on Friday.

Three-month copper on the London Metal Exchange ended at $7,150 a tonne, its lowest since Dec. 11 and down 0.4 percent from Friday's close. "In China we're seeing credit tightening conditions persist, and generally a risk-off attitude in the run-up to the Lunar New Year. (Also) the general consensus is wait and see with regard to the Fed meeting," Sucden Financial analyst Kashaan Kamal said.

Concerns about a possible default of an investment product sold by a Beijing-based investment trust battered Shanghai shares earlier, adding to liquidity concerns as cash demand spiked ahead of the Lunar New Year holiday. The holiday begins on Jan. 31 and extends through next week.

There was also renewed turmoil in emerging markets, a consequence of Fed tapering concerns coupled with political risks in Ukraine, Turkey and Thailand, and a looming financial crisis in Argentina.

Fed officials will begin their regular two-day policy meeting on Tuesday. "I still hold the view China's growth should stay on track and with the acceleration in developed markets, the synchronised move should allow us to go higher on most of the metals," said analyst Dominic Schnider of UBS Wealth Management.

Zinc, lead and aluminium were offering value, Schnider said. Elsewhere, port workers in Chile negotiated a settlement with management on Saturday and ended a more-than-three-week-old strike that had slowed shipments from a country that produces a third of the world's copper.

In other metals, nickel closed 2.3 percent lower at $14,150 a tonne, having earlier hit its lowest since mid-January at $14,131 as investors reappraised the impact of Indonesia's ban on exports of unprocessed mineral ores. Aluminium ended down 0.4 percent at $1,755 a tonne, zinc closed down 0.5 percent at $2,010 a tonne, lead ended 1.1 percent lower at $2,143 a tonne while tin ended 1.6 percent lower at $21,850.   

    PRICES    
    Three month LME copper          
    Most active ShFE copper         
    Three month LME aluminium       
    Most active ShFE aluminium      
    Three month LME zinc            
    Most active ShFE zinc           
    Three month LME lead            
    Most active ShFE lead           
    Three month LME nickel          
    Three month LME tin           

($1 = 6.0488 Chinese yuan)