METALS-Copper slides as available LME inventories jump

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- Copper prices fell on Monday after a jump in available inventories in London Metal Exchange-approved warehouses and a firmer dollar triggered selling while above-consensus loan data from top consumer China provided some support.

Benchmark copper CMCU3 on the LME was down 0.5% at $9,917 a metric ton at 1010 GMT. Strong technical support exists around $9,565, the 100-day moving average.

At 109,625 tons, headline copper stocks in LME warehouses are only up 900 tons MCUSTX-TOTAL. However, traders are looking at inventories that were cancelled or earmarked for delivery but were then re-warranted.

More than 26,000 tons of copper that was due to leave the LME system in Asia was re-warranted, meaning those volumes can again be traded on the exchange.

President Donald Trump last week announced 50% copper tariff effective August 1. Traders said the cancelled inventories had likely been intended for shipment to the United States ahead of import tariffs, which the industry had expected would be announced in November.

Logistics sources said the three weeks between the announcement and the August 1 deadline did not allow enough time to ship metal from Asia.

Higher availability on the LME has widened the discount for the cash copper contract against the three-month forward contract CMCU0-3 to $45 a ton, the highest since April 23.

Elsewhere, improving Chinese loan data suggested stimulus measures boosted credit demand during the U.S.-China trade truce. Particularly encouraging was total social financing, used by analysts as a gauge of industrial metals demand, rising to 8.9% last month from 8.7% in May.

"Apart from tariffs, the other discussion is about Chinese stimulus," said Bank of America analyst Michael Widmer. "There's a possibility they are taking a closer look at overcapacity in some industries. It may mean they try to support the housing market."

Clues to Chinese demand are expected to come this week from China's housing price, industrial production and GDP data.

Overall, a firmer U.S. currency is weighing on industrial metals.

Aluminium CMAL3 was down 0.9% at $2,581, zinc CMZN3 slipped 0.8% to $2,718, lead CMPB3 fell 0.7% to $2,006, tin CMSN3 firmed 0.1% to $33,700 and nickel retreated 0.1% to $15,170 a ton.


(Reporting by Pratima Desai; Editing by Joe Bavier)

((pratima.desai@thomsonreuters.com))

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