Shanghai copper down 1 pct, aluminium steady

SINGAPORE, Feb 8 - Shanghai copper fell one percent on Thursday, but aluminium was steady, despite a 2 percent slide in London futures.

The most active April copper contract was down 510 yuan at 50,310 yuan ($6,494) a tonne at the midday break.

"Expectations of Chinese re-stocking after the Lunar New Year have encouraged some to go long of copper in London and Shanghai, but the pick-up may be weaker than expected," said Ren Jingwen, analyst at Huawen Futures Brokerage Co. Ltd.

Shanghai spot copper prices were down 700 yuan at between 53,200 yuan and 53,400 yuan, while in eastern China premiums for physical copper were around 400 yuan to 600 yuan a tonne.

The most traded April Shanghai aluminium futures contract ticked 40 yuan lower to 19,530 yuan, shrugging off a 2 percent fall in London futures on Wednesday.

"Spot aluminium is temporarily in short supply on purchases by fabricators, which are buoying the futures market," Li Rong at Great Wall Futures said.

Copper for delivery in three months on the London Metal Exchange was down $50 at $5,375.

Stocks of copper in LME warehouses rose 3,175 tonnes to 215,750 tonnes on Wednesday. They have doubled in the past 12 months and are about eight times higher than in July 2005.

Copper prices have fallen 15 percent so far in 2007 and are down almost 40 percent from May's record $8,800-a-tonne high, but some analysts expect a recovery in prices.

"The latest sell-off satisfied short-term technical objectives," Standard Bank, London, said in a monthly report.

"The next move is likely to be consolidation at higher levels followed by a more significant recovery." In a Reuters poll last month, analysts saw cash copper prices averaging $6,100 a tonnes in 2007, down from an average $6,731 in 2006. Cash prices so far in 2007 have averaged $5,636.

Aluminium was down $3 at $2,654 a tonne at 0422 GMT.

Some 8,000 call options for LME aluminium at a strike price of $3,000 expired on Wednesday without being exercised.

Dealers said the options may have been bought in an attempt to coax prices back towards $3,000, by stimulating delta hedging -- buying metal against the risk of options being exercised.

"People were holding their breath a little on Wednesday but we didn't see the commotion that some were expecting and hoping for," Andrew Harrington of Australia and New Zealand Bank said.

After the expiry aluminium came under pressure, dropping to $2,639.75, its lowest in around three weeks.

But Harrington said: "In the shorter term, there will be a lot of volatility, but we could see renewed strength in aluminium."

"We might get back towards $3,000, but that won't be a stable price point, just an upward spike within a longer-term downward trend," the ANZ analyst, who has been tracking commodity markets for 10 years, said.

Nickel was down $200 at $35,700 a tonne.

Nickel stocks in LME warehouses rose for the first time since Jan. 22, up 138 tonnes at 3,120 tonnes, but still near their lowest in almost 16 years, while the premium for cash metal was $3,500/3,700 a tonne above the benchmark future.

Of the total stocks, 618 tonnes are earmarked for delivery, leaving 2,502 tonnes to support the 1.4 million tonne-per-year
market.
 Metal Prices at 0422 GMT
 LME Cu         5375.00        -50.00       -0.92
 SHFE Cu*      50310.00       -510.00       -1.00
 LME Alum       2654.00         -3.00       -0.11
 SHFE Alu*     19530.00        -40.00  &nbs