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METALS-Demand doubts drive copper towards biggest monthly fall since 2015

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(Updates with closing prices) By Peter Hobson LONDON, May 31 (Reuters) - Copper was set for its biggest monthly fall since November 2015 as weak Chinese factory data and a U.S. threat to impose tariffs on Mexican goods fanned fears that trade disputes will damage the global economy and demand for metals.


Benchmark copper on the London Metal Exchange (LME)ended down 0.4% at $5,830 a tonne.


The metal used in power and construction has slipped 9% this month, its third straight monthly fall.



Most other industrial metals also fell in May, with zinc having its biggest monthly tumble since 2012.


"The fundamentals (for copper) are OK, it's the expectations that demand will be further undermined by tariffs and recession fears hitting prices," said Societe Generale analyst Robin Bhar, adding that copper was likely to target a January low of $5,725.


CHINA DATA: China's factory activity slumped in May to a deeper contraction than expected. China is the world's largest consumer of metals. MEXICO: U.S. President Donald Trump has threatened tariffs on all goods from Mexico, starting at 5% and ratcheting higher, until illegal immigrants are stopped entering the United States. TRADE WAR: China threatened to unveil an unprecedented hit-list of "unreliable" foreign firms, groups and individuals that harm the interests of Chinese companies. GLOBAL MARKETS: European and U.S. stocks tumbled and sovereign bonds surged. Chinese stocks saw the biggest monthly decline since October and oil suffered its steepest monthly drop in six months. JAPAN: A small bright spot was Japan, where industrial output rebounded in April. DOLLAR: The dollar dipped on Friday but was near two-year highs, making metals pricier for buyers with other currencies. FUNDAMENTALS: Supply side problems are likely to lead to a tighter copper market, supporting prices. CHILE: Top producer Codelco reported an 18% year-on-year drop in its first-quarter copper output amid strike fears. TC/RCs: Spot prices for refining copper concentrate have fallen to their lowest in 6-1/2 years. ZINC: LME zinc finished 1.4% lower at $2,524 a tonne, down almost 11 percent in May. However, weak output from Chinese smelters is likely to persist longer than expected, keeping the market tight. TIN: Benchmark tin did not trade in closing rings but was bid down 0.4% at $18,710. It is down 5% in May after falling 8% in April. Stockpiles in LME-registered warehouses have more than quadrupled since early May and the premium for cash tin over three-month metal more than halved to $125, suggesting a supply squeeze has eased. OTHER METALS: LME aluminium ended up 0.7% at $1,795 a tonne and was roughly flat this month. Lead closed down 0.1% at $1,805 and around 6 percent lower this month.


Nickel was not included in closing rings but had slipped 1.1% to $12,020 in electronic trading. It was broadly unchanged in May.
<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^ Top Base and Precious Metals Analysis - GFMS LME copper is set for the biggest monthly fall in 3-1/2 years ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Reporting by Peter Hobson Additional reporting by Mai Nguyen Editing by David Evans and David Holmes)


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