Noront Resources

METALS-Copper dips on demand woes, weak fundamentals


* Weak fundamentals and data cause cross-market selling

* Focus on inventories as nickel slides more than 5 percent



LONDON, Aug 17 (Reuters) - Copper eased on Monday as
concerns over the economic recovery caused industrial metals to
pull back, with investors still uncertain over the demand
outlook against a backdrop of weak fundamentals.

By 0929 GMT, copper for three-month delivery on the
London Metal Exchange fell to $6,024 a tonne from $6,240 at the
close on Friday and compared with a session low at $6,000.

A weaker-than-expected report from the Reuters/University of
Michigan Survey of Consumers ignited cross-market selling late
on Friday. [ID:nN14294408]

Adding to the negative sentiment, equity markets fell on
Monday after data showing Japan's economy became the third G7
country after Germany and France to pull out of recession,
failed to impress investors. [nTOPWRAP]

"It's a continuation from Friday," said Gayle Berry, an
analyst at Barclays Capital. "This is the trend we've been
seeing in recent months -- a week or so of very strong gains and
then a pullback.

"It was to be expected. It doesn't mark the beginning of a
turnaround ... the market is still positive for the outlook for
the second half."

Prices of the red metal, used in power and construction,
fell more than 3 percent on Friday, as U.S. consumer data
suggested a global economic recovery may be slow.

Highlighting weak fundamentals for industrial metals, copper
stocks rose 1,175 tonnes to 294,050 tonnes.

Looking ahead, Berry added that labour contract negotiations
in the coming months will be keenly watched by investors.

Aluminium fell $61 to $1,929. LME stocks in the metal, used
in transport and packaging, fell 5,075 tonnes but remain at
near-record levels above 4.5 million tonnes.

Aluminium has gained more than 25 percent this year, with
financing deals designed to release cash for producers said to
be partly behind the surge. [ID:nLL175677]

Analysts estimate about 70 percent of stocks in LME
warehouses are tied up in such deals until next May.



MIXED PICTURE

"The speed of recovery in base metals prices has caught many
in the market by surprise," said Societe Generale in a note.
"While there has been a modest improvement in the fundamental
picture for most metals, the picture is still somewhat mixed."

"China remains the key focus for metal demand recovery,
driven by the infrastructure focused fiscal stimulus plan, but
demand in the world ex-China remains largely subdued at best."

Chinese stockbuilding and improving economic data has
boosted base metal prices this year, but with the summer lull in
full swing, analysts predict price corrections this quarter.

In other base metals, steel making ingredient nickel
fell more than 6 percent to a low of $18,301 a tonne before
easing back to trade at $18,650 from $19,500.

As nickel inventories rose by 210 tonnes to 108,366 tonnes,
traders will also be watching closely problems at Vale Inco's
Canadian operations. [ID:nN11527137]

Battery material lead was at $1,781.50 from $1,862,
zinc slipped to $1,760 a tonne from a last bid at $1,825
on Friday.

Tin edged lower to $14,030 from $14,450.

Used in electrical solder, tin investors remain concerned
about the scale of long or buy positions in the tin market,
compared with the amount of available metal in LME warehouses.
[ID:nL7149027].

Looking ahead, the market is expected to turn to New York
factory data for August at 1230 GMT and a raft of housing data
due later on Monday and on Tuesday for further direction.



Metal Prices at 0933 GMT
Metal Last Change Pct Move End 2008 Ytd Pct

move
COMEX Cu 283.40 0.00 +0.00 139.50 103.15
LME Alum 1925.00 -65.00 -3.27 1535.00 25.41
LME Cu 6025.00 -215.00 -3.45 3060.00 96.90
LME Lead 1775.00 -87.00 -4.67 999.00 77.68
LME Nickel 18600.00 -900.00 -4.62 11700.00 58.97
LME Tin 13955.00 -495.00 -3.43 10700.00 30.42
LME Zinc 1760.00 -150.00 -7.85 1208.00 45.70
SHFE Alu 14625.00 -615.00 -4.04 11540.00 26.73
SHFE Cu* 47790.00 -2430.00 -4.84 23840.00 100.46
SHFE Zin 14375.00 -645.00 -4.29 10120.00 42.05
** 1st contract month for COMEX copper
* 3rd contract month for SHFE AL, CU and ZN
SHFE ZN began trading on 26/3/07

.Spot silver was bid at $14.26 an ounce against $14.68. Elsewhere, platinum was at $1,235 an ounce against $1,254.50, while palladium was at $269 against $273.50.

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