Shanghai copper eases

Shanghai copper futures edged lower on Friday, awaiting direction, while technical weakness battled with expectations of continued consumer buying. Shanghai copper for May delivery slipped to 57,250 yuan ($7,393) a tonne, from 57,490 yuan on Thursday.
Three-month copper on the London Metal Exchange was down $30 to $6,080 a tonne. Copper closed $95 higher on Thursday at $6,010. "There are no strong indications that London copper will rise soon," CIA Luoyi, an analyst at China International Futures, said. He noted London Metal Exchange copper's inability to make progress much above $6,000, which raised the possibility of renewed selling.
"London Metal Exchange copper may fall and bring down Shanghai copper with it."
However some traders are expecting buying interest to continue from Chinese consumers as business had picked up after Lunar New Year holidays last week.
"We are seeing demand from consumers after the New Year and I think it will continue. Stocks are arriving in Shanghai and people are buying," a dealer in Shanghai said.
Shanghai spot copper was between 57,100 yuan and 57,350 yuan, down 600 yuan. Dealers saw Shanghai copper stocks rising around 10,000 tonnes from 31,007 when weekly data is released later on Friday. Stocks in London Metal Exchange warehouses fell 2,575 tonnes on Thursday to 205,400, their lowest since January 24, and dealers said the rising trend in stocks, which started in October 2006, had stalled.
"You can probably tie this abatement to the imports into China," an LME dear said, "It has been profitable for merchants to take LME metal and ship it to China," a trader in Singapore said. "This trade has been going since late last year and will continue for as long as the discount of LME remains. The implication is that Chinese stocks will rise as Chinese consumers take advantage of those cheaper imports."
China's refined copper imports jumped 86.3 percent to 131,851 tonnes in January, compared with a year. Shanghai aluminium was 70 yuan weaker at 19,670 yuan. LME aluminium was down $9 a tonne at $2,786. "Aluminium has been on a positive track, climbing towards $3,000 just 10 percent below its peak," Andrew Harrington, analyst an Australia and New Zealand Bank said.
"That comes as something of a surprise as a voluntary slowdown in China output is unwinding, and the backwardation is still in place despite rising stocks." Primary aluminium stocks in warehouses in China may have risen by more than 100,000 tonnes over the past 10 days due to a slowdown in local trade during the Chinese Lunar New Year break.
Industry sources believed 100,000 to 120,000 tonnes of aluminium were stored in warehouses in eastern China compared with about 30,000 tonnes in mid-February. Stocks at warehouses in Naha City in China's southern Guangdong province were estimated at about 50,000 tonnes, versus about 15,000 tonnes before the weeklong holiday. Shanghai exchange stocks were seen rising almost 100 percent to above 60,000 tonnes.
Firm premiums, currently around $35 a tonne for cash metal above three months futures in London, have helped LME stocks to climb by around 100,000 tonnes since the start of January to 803,300 tonnes.
Nickel was $100 lower at $41,400, after touching a record $42,200 on Thursday. "Nickel's story remains the same. Ridiculously low stocks supporting a strong market and there is a lot of speculative money keen on taking a punt that prices will get above $45,000," Harrington said. Stocks rose on Thursday by 48 tonnes to 3,342 tonnes.
Out of that, some 40 percent is earmarked for delivery, leaving 1,980 tonne, or half a day's consumption, available. Lead, which surged 5.5 percent on Thursday to close at $1,920 a tonne, was down $35 at $1,885.