Shanghai copper falls

Shanghai copper shed three-quarters of a percent on Monday following a fall in London futures on a shock decline in US payrolls numbers late last week. US employers cut 4,000 jobs in August, the first time in four years that monthly hiring contracted, the government said in a report.
Analysts said it was a sign that problems in credit markets were spreading to the broader economy. The market had expected a rise in payrolls of around 110,000. "The grip of the supreme mortgage crisis is apparent, as jobs growth has slowed to much less than half its second-quarter 139,000 monthly pace.
The risk of recession has increased to 50 percent," said Peter Maurice, professor at the University of Maryland School of Business and former chief economist at the US International Trade Commission.
"Overall, the pace of employment growth indicates the economy is expanding much more slowly than the 4.0 percent annual GDP growth posted in the first quarter," he said, adding that third-quarter growth was likely to be a about 2 percent or less.
The surprisingly weak number strengthens the case for an interest rate cut when US Federal Reserve meets next week, which analysts now say may be as great as 50 basis points.
"A rate cut by the US Federal Reserve would certainly ease investor concerns and it is increasingly likely that it will happen," said Martin Arnold, an equities economist at comes in Sydney. Shanghai's most active November copper contract was 0.7 percent or 480 yuan lower at 64,420 yuan ($8,548) a tonne. "Expectations of a pick-up in Chinese demand are supporting copper prices," analyst Wang Zheng at Faber Metals said.
"It is widely expected that demand in the country will rise in September and October, but it will be hard to squeeze prices much higher as stocks in London are relatively high," he said. Shanghai exchange stocks stand at 63,589 tonnes, down from nearly 100,000 tonnes at mid-year, while London Metal Exchange stocks at 137,775 tonnes are up by around 40 percent in the same period.
Copper for delivery in three months on the London Metal Exchange was up $20 at $7,190 a tonne after falling 1.8 percent on Friday. Dealers said base metals prices were partially insulated from a slowdown in the United States as demand from China, the world's largest metal consumer, is likely to remain robust should markets elsewhere start to soften.
"Any major hiccup in the US would affect the world economy and slowing global growth will hurt China," an LME dealer said. "But the Chinese economy will be more resilient than most. A lot of growth there is infrastructure-related. Export industries will be more vulnerable but I don't expect doomsday."
Shanghai November aluminium was downs 20 yuan at 19,320, while its LME counterpart was up 50 cents at $2,450. The most active February 2008 contract in Shanghai was down 10 yuan at 19,310. China will produce half the world's aluminium by the end of the next decade and will be largely self sufficient in the metal through 2010, an official at Alcan, one of the world's top producers, said on Friday.
"Half of the world production in 2016 or 2020 will come from China," Pierre Arsenals, vice president of Strategic Planning and Energy at Alcan Primary Metal Group, said.
China produced 28 percent of global aluminium, or 9.3 million tonnes, in 2006. Output rose 34 percent to 6.7 million tonnes in the first seven months of this year. LME prices have fallen 13 percent this year, while copper has risen by a similar amount.
Aluminium has come under pressure in the past week after inventories hit a 3-year peak of 866,925 tonnes. Stocks have risen almost 5 percent since the start of September, and are now at there highest since August 2004.