LME Metals Mixed In Asia; Copper Continues Slide

SINGAPORE--London Metal Exchange copper continued to slide in Asia Friday, pressured by a selloff in London overnight and limit-down losses on Shanghai Futures Exchange copper.

Bearish economic data from the U.S. Friday could also add some downward momentum, although traders said they expected copper will likely find support near current levels.

Three-month copper had drifted to $7,632 per metric ton as of 0607 GMT, $22 lower on the London PM kerb. Aluminum edged $6 higher to $2,816/ton, while zinc gained $5 to $3,710/ton.

Traders said market participants were busy squaring positions ahead of the holidays in Asia's biggest markets next week and the end of the month nears.

"No one wants to have positions, especially speculators," said a Tokyo-based trader with a large Japanese commodity brokerage.

China's markets will be closed from May 1-7, while Japan will be off three days next week. Other Asian markets will also be closed for one or two days next week. As well, much of Europe will be on holiday for May 1.

Pre-holiday positioning may add some pressure in the short term, said National Australia Bank analyst Gerard Burg. "The general trend is to close out positions prior to a holiday that can lead to softness."

Traders peg next support for copper around $7,585/ton, then the 30-day average at $7,290/ton.

In the absence of fresh fundamental news, the market will look for price direction to the U.S. first quarter GDP and a possible strike in Peru, traders said.

The annual rate of first-quarter GDP growth is forecast at 1.8%, below the psychologically important 2% rate, economists surveyed by Dow Jones Newswires predicted.

Peru's National Federation of Mining, Metallurgy and Steel Workers has called for a nationwide mining strike to begin Monday. Mining companies in Peru have said their operations won't be significantly affected, and the market seems unsure of the impact a strike would have.

"At this point the chances of a strike materializing or affecting production in a tangible way do not appear to us to be very high," Barclays Capital said in a daily note. "However, nervousness in the market is understandable in light of the still hefty short positions in both the copper and zinc markets."

Aluminum moved in a narrow band in Asia, still firmly within its recent trading range despite hitting a fresh low overnight, traders said. Stocks at the Shanghai Futures Exchange may provide some short-term direction, as the market is eager to know if China's dramatic production ramp-up in the first quarter will be absorbed by the domestic market.

China's first-quarter output of aluminum products rose 43% on year, while alumina output was up 53.7%.

In Japan, aluminum products output was up 9.6% on month, but rose just 0.3% on month to 205,841 tons, according to preliminary data from the Ministry of Economy, Trade and Industry.

As of 0607 GMT, nickel, lead and tin had yet to trade in Asia. Nickel was last quoted at $47,000/ton, up $100 on the London PM kerb; tin was quoted up $95 at $13,095/ton; and lead was quoted up $1.15 at $1,961.15/ton.