Copper vulnerable, signs of weak China demand weigh

Copper prices steadied on Wednesday near the four-month lows hit earlier this week as the market fretted about weak demand in top consumer China after data showed falling imports of the metal into the country.
Benchmark copper on the London Metal Exchange closed 0.2 percent down at $5,500 a tonne, having touched $5,481.50 near Monday's $5,462.50, its lowest since January 4. "Economic data from China is the key to copper," said Quantitative Commodity Research analyst Peter Fertig.
"The figures for new loans, due soon, could give copper another dent as lower lending would cut the amount available for housing loans." Chinese copper imports collapsed by more than 30 percent month on month in April to 300,000 tonnes. Concentrate and ore imports tumbled by 16.6 percent to 1.36 million tonnes. A Reuters poll predicted that Chinese banks extended 714.0 billion yuan in new loans in April, down from 1.02 trillion yuan in March, though part of that was seen as a payback from the previous month's solid numbers and not necessarily the start of a sharp slowdown.
A higher US currency also weighed on sentiment because it makes dollar-denominated metals more expensive for holders of other currencies, potentially dampening demand. Also undermining copper are stocks in LME approved warehouses, which at 339,200 tonnes are up more than 30 percent since April 28. Supply of copper scrap has tightened recently after growing in the first quarter, while disruptions at major mines this year are hitting availability, said the co-founder of metals hedge fund RK Capital Management.
Tin stocks at 2,290 tonnes are at their lowest since 1989 and less than 1 percent of global consumption estimated at about 350,000 tonnes this year. Fears of tin shortages on the LME market have created a premium for the cash price over the three-month contract. The premium stood at $78 a tonne at the close on Tuesday. Benchmark tin closed at an unchanged $19,675 a tonne.
Traders are also watching large holdings of aluminium, zinc, lead and tin cash contracts and warrants, which could also mean tighter nearby supplies on the LME. Nickel ore output in the Philippines, the world's leading supplier, fell 51 percent in the first quarter because of rains and the suspension of mine operations, government data showed on Wednesday. Aluminium slipped 0.3 percent to $1,865 a tonne, zinc lost 0.5 percent to $2,600, lead added 0.7 percent to $2,190 and nickel finished 1 percent down at $9,120.