Off The Wire
METALS-Copper rises on bargain hunting, gains seen fragile
* LME/ShFE arb: (Updates with official prices)
By Eric Onstad
LONDON, Dec 7 (Reuters) - Copper rose on Thursday as bargain hunters took advantage of recent losses, though analysts expect further downward pressure because of weaker demand from China.
"The general tendency is still to buy the dips; there's still some optimism there," said Carsten Menke, analyst at Julius Baer in Zurich. "But I think that copper is trading at lofty levels... We've already seen Chinese property starts and sales growth turning negative recently."
Chinese copper demand from its huge construction sector alone is greater than total copper demand from either Europe or the United States, Menke added.
Benchmark copper on the London Metal Exchange rose 0.2 percent to $6,566 a tonne in official open outcry trading. Copper, which has gained 19 percent this year, fell on Tuesday to $6,507.50, its weakest since Oct. 10.
Julius Baer has a three-month price target for copper of $6,000.
* COPPER SUPPLY: News that Zambia lifted a ban on night driving for truckers was welcomed, but Menke said bottlenecks were still feared after the Tanzania-Zambia Railway Authority (TAZARA) suspended all train services following a strike, including the transportation of copper. * ALUMINIUM: LME three-month aluminium shed 0.4 percent in official rings to $2,011 a tonne after touching a four-month low of $1,998.50. A confirmed break of support at the 200-day moving average of $2,000 would open the way to further selling.
* ALUMINIUM PREMIUMS: Some Japanese aluminium buyers have agreed to pay some global producers a premium of $103 a tonne for shipments in the first quarter of next year, higher than the $94-$95 premium in the current quarter. * CHINA ALUMINIUM: High inventory in China has weighed on the market there. Shanghai stocks topped 700,000 tonnes this month, the highest in the nearly two-decade history of the contract and 28 percent above the 2013 cycle peak. * NICKEL: LME nickel , untraded in rings, was bid up 0.1 percent to $10,810 a tonne after touching a new two-month trough of $10,740.
* VALE NICKEL: Providing some support was news that Brazilian miner Vale SA dialled back its nickel output forecasts for the next five years on Wednesday. * ZINC: LME zinc rose 0.4 percent to $3,098.50 a tonne in official rings while lead was bid down 0.1 percent to $2,504.
"Yesterday's underperformance vs lead saw the switch narrow to -$578, the tightest seen since Sept. 22," Alastair Munro at broker Marex Spectron said in a note.
He was referring to the spread between the sister metals, which many investors use as a basis for trading, which has declined from a peak of $851 on Oct. 31.
TIN: LME tin dipped 0.1 percent in official trading to $19,470.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Top Base and Precious Metals Analysis - GFMS LME/ShFE arb ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Eric Onstad; Editing by Elaine Hardcastle and David Goodman)