ANALYSIS-Weak U.S. metal imports may bounce on auto rebound

By Chris Kelly NEW YORK, Aug 13 (Reuters) - Across-the-board declines in shipments of copper, aluminum and nickel into the United States reflect slower summer business conditions and a depressed auto industry. Amid more signs of economic stabilization and an extension of the government's "cash for clunkers" auto sales incentive program, imports of industrial metals should perk up. Data from the U.S. International Trade Commission on Wednesday showed June imports of copper fell 32 percent from May to 35,685 tonnes, aluminum fell more than 40 percent to 128,070 tonnes and nickel was down a staggering 53 percent at 2,340 tonnes. Sterling Smith, an analyst for Country Hedging Inc in Inner Grove Heights, Minnesota, said seasonal factors and demand destruction from the U.S. auto industry hurt imports. "We had a lot of plant shutdowns and we had not moved a lot of automobiles up until the 'cash for clunkers' bill, so stockpiles and inventory on hand in many cases were probably there," he said. While U.S. automotive production managed to eke out a 3.9 percent month-to-month gain in June to 374,432 cars and trucks, output was still down a whopping 54.8 percent from year-ago levels. According to the Copper Journal, 2.358 million vehicles were produced year-to-date, down more than 50 percent from 4.919 million last year. However, the recent success of the "cash for clunkers" trade-in program should give the beleaguered auto industry a much-needed shot in the arm, which, in turn, should help spark an improvement in domestic demand for industrial metals. "The simple fact is it was an unexpected winner that will get people back to work, factories cranked up, dealerships back in the black and, most importantly, send another signal that we are turning the corner, thereby instilling a greater sense of confidence in the economy as a whole, with the ripple effect felt far and wide," John Gross, publisher of the Copper Journal, said of the "clunkers" program. On Thursday, Ford Motor Co said it would increase production over the rest of the year to meet increased demand from the federal government's sales incentive program. The increased production outlook came a day after the U.S. Federal Reserve said the economy was showing signs of leveling out and that financial markets were on the mend. "While import numbers for key industrial metals were down for the month of June, a combination of a favorable economic assessment by the FOMC and the success of the 'cash for clunkers' program bodes well for expectations of a pick up in demand come year's end," said Ralph Preston, futures analyst with HeritageWestFutures.com in San Diego, California. Country Hedging Inc's Smith concurred, expecting an improvement in the import figures as early as September. (Editing by Walter Bagley)