BASE METALS: Shanghai Metals Fall; Econ Concerns Continue To Weigh

SHANGHAI (Dow Jones)--Base metals on the Shanghai Futures Exchange fell Thursday on persistent concerns over the global economy fueled by disappointing economic indicators.

Aluminum lost the most ground as investors locked in profits following its recent gains, while copper was partially supported by an ongoing strike at the world's largest copper mine, Chile's Escondida, that crimped supply.

Benchmark SHFE October copper settled 0.7% lower at CNY71,540 a metric ton and benchmark October aluminum settled 1.4% lower at CNY18,215/ton.

Weakness on the global metals markets overnight set the tone for Shanghai metals as bearish economic data out of the U.S. added to concerns over the health of its economy, despite a better-than-expected private-sector jobs report in July.

The Institute of Supply Management's non-manufacturing index slipped to 52.7 in July, below the 53.5 consensus forecast and down from 53.3 in June, and orders for U.S. factory goods fell for the second time in three months during June, indicating that a still-moderate economic recovery is taking a toll on manufacturers.

Meanwhile, fears of debt contagion in euro-zone economies continued to weigh on investor sentiment, especially with fears that Europe's sovereign debt problems are spreading to larger economies such as Italy and Spain, which are deemed too big to be saved by the existing euro-zone bailout fund.

Analysts said metals' movements may continue to be closely linked with macroeconomic conditions, and investors will take cues from the dollar's movement in response to any headlines out of Europe or the U.S.

"Euro-zone sovereign debt woes will be on investors' radar at least in the near term, and I'm not surprised to see a downward correction if anything big pops out from there," said Shanghai Cifco Futures analyst Fang Junfeng.

Copper traded at the Changjiang Nonferrous Metals Trading Market, a major spot metals market in Shanghai, was quoted at CNY71,300-CNY71,400/ton, down from CNY71,650-CNY71,750/ton Wednesday.

Three-month London Metal Exchange copper ended Wednesday's afternoon kerb $149 lower at $9,530/ton.

It was quoted 0.5% higher at $9,581/ton around 0700 GMT, when the SHFE closed.

SHFE lead settled 1.1% lower and zinc lost 0.8%.

Thursday's settlement prices in yuan a ton and LME late kerb prices from Wednesday in dollars a ton:

 
            SHFE                     LME
Copper      Oct  71,540  Dn 520      3Mo  9,530     Dn 149
Aluminum    Oct  18,215  Dn 255      3Mo  2,525     Dn 58
Zinc        Oct  18,265  Dn 150      3Mo  2,376.5   Dn 63.5
Lead        Sep  16,960  Dn 195      3Mo  2,522     Dn 38

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