Copper tumbles in Shanghai

Copper prices took another tumble on Monday, with most Shanghai futures contracts falling by their daily downside limits as investors fretted over rising inventories, despite an otherwise robust market outlook.

Shanghai copper futures <0#SCF:> fell by their 4-percent daily limit at the opening and failed to recover as a plunge in London Metal Exchange three-month copper to four-month lows on Friday turned buyers away.

"Copper's starting the week the way it ended last week, in negative territory," a metals trader said.

Most Shanghai copper futures closed limit-down, with the most-active January contract <0#SCF:> dropping to 65,060 yuan ($8,277) a tonne, against 67,450 yuan at last Friday's close.

A weaker U.S. dollar did little to spark interest in London Metal Exchange contracts, with copper for delivery in three months on the LME quoted at $6,850 a tonne.

The contract fell $410, or 5.6 percent to $6,900 in London on Friday after LME stocks leapt 1,625 tonnes to 148,200, up 54 percent from the start of the year.

"Fundamentals for copper still look strong, but the stocks can't be ignored," a second trader said.

China's strong appetite for copper to feed industrial growth has long fuelled copper prices.

Expectations that this trend will continue were underscored by news last week that copper smelters might continue to chase limited supplies of concentrate next year.

Chile's giant Escondida mine, majority owned by BHP Billiton Ltd/Plc , has opened 2007 copper treatment and refining charge talks with Chinese smelters with an offer a third lower than charges for 2006.

"That tells us that at least BHP thinks smelters are desperate for concentrate," the second trader said.

High copper prices, which hit a record $8,800 a tonne in May, had kept China off the world copper market for months. Imports of copper, including semi-finished products, fell 22.4 percent between January and October as it relied on its own stockpiles.

But with copper prices slumping and domestic stockpiles diminished somewhat, some analysts think China may turn buyer.

"There is no visible oversupply in China's copper market. A strong price rise may appear if buying interests of consumers and investors are prompted by a might-be shortage in domestic physical market," Xue Feng, an analyst at Maike Enterprise Group said in a market note.

Three-month nickel, which zoomed to a record $32,625 on Oct. 20, was up $100 at $29,500 a tonne.

Australia's Western Areas NL ,WSA.TO> on Monday joined a growing legion of outback miners looking to increase output in response to nickel's surge.

The miner said it wanted to lift output of nickel in concentrate by 5,000 tonnes a year from 12,000 tonnes at its Flying Fox mine as it sees a strong nickel price going forward.

Nickel miners in the far western Australia outback, including Australian Mines Ltd. , Mincor Resources NL , Fox Resources Ltd. and Jubilee Mines NL are making plans to dig more nickel on expectations that demand for the metal will stay strong.

Metal Last Net Change Pct Move LME Cu 6910.00 10.00 +0.14 SHFE Cu* 65060.00 -2390.00 -3.54 LME Alum 2705.00 10.00 +0.37 SHFE Alu* 20110.00 -390.00 -1.90 COMEX Cu** 307.75 0.00 +0.00 LME Zinc 4335.00 35.00 +0.81 LME Nickel 29500.00 100.00 +0.34 LME Lead 1675.00 0.00 +0.00 LME Tin 9750.00 -100.00 -1.02

Change so far in 2006

Metal Latest bid End prev year Pct Move LME Cu 6910.00 4395.00 +57.22 SHFE Cu* 65060.00 41720.00 +55.94 LME Alum 2705.00 2276.00 +18.85 SHFE Alu* 20110.00 19360.00 +3.87 COMEX Cu** 307.75 204.20 +50.71 LME Zinc 4335.00 1905.00 +127.56 LME Nickel 29500.00 13500.00 +118.52 LME Lead 1675.00 1051.00 +59.37 LME Tin 9750.00 6475.00 +50.58