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METALS-Copper softer on China inflation worries

Published 04/14/2011, 12:33 PM
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* China March inflation accelerates to 5.4 percent - media

* U.S. weekly initial jobless claims rise unexpectedly

* Copper warehouse inventories rise

(Updates prices, adds detail)

By Sue Thomas and Rebekah Curtis

LONDON, April 14 (Reuters) - Copper fell to its lowest in more than a week on Thursday, as reports of quickening inflation in top consumer China pointed to more monetary tightening, which investors worried would hit demand for industrial metals.

Also pressuring industrial metals, U.S. equities fell after an unexpected rise in jobless claims and concerns about higher inflation overseas.

Three-month copper on the London Metal Exchange (LME) was at $9,410 a tonne from $9,515 at the close on Wednesday.

"Especially in copper, there's a fear of possible rate hikes in China," Eugen Weinberg, an analyst at Commerzbank, said.

Chinese inflation in March accelerated to as fast as 5.4 percent from a year earlier, Hong Kong media said on Thursday, reinforcing concerns about the government tightening monetary policy.

The official release of the data is due on Friday.

Premier Wen Jiabao has also warned about inflation risks due to soaring global commodity and oil prices, pointing to another interest rate hike.

China's central bank has increased benchmark interest rates four times since last October and has required the country's big banks to put a record high of 20 percent of their deposits with the central bank as reserves.

The market also focused on open interest in copper, which has fallen since mid-January, reflecting investor caution and a steady rise in warehouse inventories since December.

LME copper open interest has fallen more than 10 percent from its peak of 324,420 lots on Jan. 14 to 289,215 lots on Tuesday.

in LME warehouses rose 875 tonnes to 450,800 tonnes, data on Thursday showed.

Zinc stocks rose some 3.6 percent, registering their biggest daily percentage increase since early December. Zinc fell to $2,400 a tonne from a close of $2,421.

"It just demonstrates that the market has generally been oversupplied outside of China since the recession," said Giles Lloyd, an analyst at CRU.

The International Lead and Zinc Study Group (ILZSG) forecast a surplus of almost 200,000 tonnes this year, the fifth year running of oversupply.

Lead was at $2,613 a tonne from $2,679.5. The ILZSG raised its forecast for a global surplus of refined lead production for 2011 to 123,000 tonnes from around 90,000.

Tin was at $32,225 a tonne from $32,250, aluminium was at $2,644 a tonne from $2,642, while nickel was $25,800 a tonne from $26,250. Metal Prices at 1618 GMT Comex copper in cents/lb, LME prices in $/T and SHFE prices in yuan/T Metal Last Change Percent Move End 2010 Ytd Percent

move COMEX Cu 428.60 -0.85 -0.20 444.70 -3.62 LME Alum 2643.00 1.00 +0.04 2470.00 7.00 LME Cu 9410.00 -105.00 -1.10 9600.00 -1.98 LME Lead 2613.00 -66.50 -2.48 2550.00 2.47 LME Nickel 25800.00 -450.00 -1.71 24750.00 4.24 LME Tin 32200.00 -50.00 -0.16 26900.00 19.70 LME Zinc 2399.00 -22.00 -0.91 2454.00 -2.24 SHFE Alu 16725.00 -65.00 -0.39 16840.00 -0.68 SHFE Cu* 71100.00 -1080.00 -1.50 71850.00 -1.04 SHFE Zin 18345.00 -220.00 -1.19 19475.00 -5.80 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by Keiron Henderson)

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