SYDNEY: London copper drifted on lower Monday after closing last week little changed, as a strike at Peru's biggest copper mine failed to undercut confidence that improving supply will eclipse a seasonal uptick in demand.
China's copper product makers typically ramp up ahead of the Christmas and Lunar New Year gift-giving seasons, but demand has been fragile this year due to flickering growth in the euro zone that is a further drag on already slowing activity in China.
"On our side we are still short term a little bit negative on all the metals, simply on growth concerns," said analyst Dominic Schnider of UBS Wealth Management in Singapore.
"I think still copper will decline to $6,350 - that's the low that we see over the next 3-6 months. Supply is finally seeing a little bit of a catch up to demand," he said.
Three-month copper on the London Metal Exchange slipped by 0.3 percent to $6,669 a tonne by 0226 GMT on Monday after ending flat in the previous session, when it hit its highest in nine days at $6,726.75 a tonne.
The most-traded January copper contract on the Shanghai Futures Exchange slipped 0.4 percent to 47,110 yuan($7,706) a tonne.
Consensus at a metals industry week in London last week was downbeat on copper, said BNP Paribas in a note.
"Negative sentiment on copper has been a feature of LME Week; closing the stable door after the horse has bolted comes to mind, given that it has fallen 35 percent since Feb '11."
Hedge funds and money managers raised bearish bets in copper. Speculators increased 567 shorts in copper in the week up to Oct. 21, the Commodity Futures Trading Commission said on Friday.
Growth in China's auto market, the world's biggest, will halve to 7 percent this year weighed down by a slowing economy, the head of an industry body said on Saturday.
Workers at Peru's biggest copper mine, Antamina, will go on an indefinite strike Nov. 10 that will halt total output running at about 30,000 tonnes per month, a union leader told Reuters on Friday.
The Antamina mine, one of the biggest copper-zinc pits in the world, is owned by BHP Billiton , Glencore Xstrata, Teck and Mitsubishi.
The fall in copper output at Antamina is being offset by rising zinc production, as the mine shifts to higher grade zinc ore, said Natixis in a note, given expectations of a zinc supply deficit next year and a copper surplus.
"The changing relative prices of zinc and copper are likely to be a major factor in the decision by some miners to favour zinc over copper," it said.
"(However) the shift towards zinc output at existing poly-metallic operations will not be enough to raise global zinc output significantly," it added.
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