LME copper slips, US jobs data, China inflation weigh

SHANGHAI: LME copper edged down on Monday, as a gloomy US jobs data, Chinese inflation and fears that the euro zone debt crisis might spread to Italy weighed on sentiment, but continuing supply disruptions and a rise in China's copper imports checked losses.

Three-month copper on the London Metal Exchange edged down 0.5 percent to $9,615.25 a tonne by 0719 GMT. The most-active September copper contract on the Shanghai Futures Exchange ticked down 0.6 percent to close at 71,470 yuan per tonne.

"I think copper is still strong although there is a small technical correction today as the market digests prices hitting recent highs. In the longer term, I see copper prices going higher as demand continues to be stable," Jinhui Futures deputy general manager Lin Yu Hui.

LME copper prices had hit $9,789.75 on Friday, the highest since April 12, before closing down 0.8 percent following dismal US job data.

"Today, there is an absence of new negative macroeconomic data, so copper price movements are directed mainly by its fundamentals. For now, the presence of supply disruption is supportive," said Dongwu Futures analyst Song Lu.

A strike paralyzing production at Freeport Indonesia's Grasberg mine, one of the world's largest sources of copper and gold, will extend into a second week after the breakdown of talks between company and workers, a union official said on Friday.

In Chile, supply was disrupted last week due to unusual winter storms, but some of the world's top copper mines started to return to normal on Saturday after the once in half a century winter storm dissipated over the copper-rich north.

The world's biggest copper mine, BHP Billiton's Escondida, was inspecting operations and slowly restarting extraction after it halted mining for two days, while Collahuasi, the world's No. 3 copper mine, is gradually normalizing operations as the weather improves.

Higher monthly imports by China also helped keep a floor under copper prices. Copper imports into China snapped two months of decline to rise 9.9 percent from May to 280,009 tonnes in June, but volumes were still down 14.7 percent from a year ago.

US JUNE JOBS GROWTH AT NEAR HALT

US jobs growth ground to a near halt in June as employers hired the fewest workers in nine months, frustrating hopes the economy would bounce back quickly from a slowdown in the first half of the year.

"The US nonfarm payroll data serves only as a short term obstacle but not a long-term impediment to copper's upward trend," said Song.

But the latest inflation data from China, the world's top consumer of copper, made investors edgy.

China's annual inflation accelerated to a three-year high in June, increasing the chances that the central bank will keep raising interest rates to tame price pressures that are spreading beyond food and energy.

China has ordered local governments to phase out a total 2.0431 million tonnes of aluminium, copper, lead and zinc smelting capacity in 2011 as part of a multi-year plan to crack down on energy-intensive and polluting industries.

The news, however, is unlikely to have limited market impact as the targeted smelters make up only a small part of the markets, Jinhui Futures deputy general manager Ling Yu Hui.

Europe's largest copper producer, Aurubis , sees a trend for rising copper prices thanks to higher demand for more electronics goods, its chief executive told a German paper.

The euro fell broadly on Monday, hurt by concern that the debt crisis is worsening as European officials gathered for an emergency meeting in Brussels amid worries that the problems could spread to debt-laden Italy.

Copyright Reuters, 2011