November 6, 2018 / 11:00 AM / 6 months ago

METALS-Copper slips ahead of U.S. elections, Fed meeting

 (Updates with closing prices)
    By Pratima Desai
    LONDON, Nov 6 (Reuters) - Copper prices fell on Tuesday as
the market waited for the result of the U.S. midterm elections
and a monetary policy meeting of the U.S. Federal Reserve later
this week.
    Benchmark copper         on the London Metal Exchange closed
down 0.5 percent at $6,158 a tonne. 
    Aside from a brief dip below $6,000 a tonne last week,
copper has been wedged in a trading range between around $6,100
and $6,350 a tonne since late September. 
    "The market is waiting for developments in the United
States, the election today and the Fed meeting. We're not
expecting a rate rise this month, but we may get clues about
December," said Capital Economics analyst Ross Strachan.
    "We're bearish in the short term on metals because of China,
where there is a significant growth slowdown and where stimulus
will take a while to feed through. We expect China to take
further easing measures over coming months."
    ELECTION: Markets are closely watching the U.S. midterm
Congressional elections, as policy decisions that could sway the
economy, corporate decision-making and consumer spending hinge
on the results.             
    FED: The U.S. Federal Reserve meets Wednesday and Thursday
and again on Dec. 18-19 when there will be a news conference.
    Many expect higher U.S. rates in December. That would boost
the U.S. currency and make dollar-denominated commodities more
expensive for holders of other currencies.       
    SUPPORT: Industrial metals gleaned some support from a
Chinese official saying Beijing was ready to work with the
United States to resolve trade disputes between the world's two
largest economies.             
    "We are expecting China and the United States to start
talks," INTL FCStone analyst Edward Meir said in a note.
    "However, we are under no illusions that the discussions
will ultimately be successful as the points in dispute are so
contentious, they may be beyond fixing."
    CHINA: New bank loans rebounded in September after dipping
in the two previous months, but overall credit conditions stayed
tight in an economy chilled by an ongoing tariff war with the
United States.             
    Export orders to the United States signed at China's largest
trade fair dropped 30.3 percent on the year, its organiser said.
    POSITIONS: A large position holding between 50 and 79
percent of zinc stocks in LME approved warehouses have fuelled
concern about nearby zinc supplies on the LME market. 
    This can be seen on the premium for the cash over the
three-month contract at around $40 a tonne CMZN0-3. The
premium is down from the three-month high of $64 a tonne seen
last week, but that compares with a discount only a few weeks
    Three-month zinc         ended down 0.8 percent at $2,501 a
    PRICES: Aluminium         fell 1.2 percent to $1,951 a
tonne, lead         closed down 1.3 percent at $1,909, tin
        slipped 0.1 percent to $19,050 and nickel         gained
0.2 percent to $11,775. 

 (Reporting by Pratima Desai
Additional reporting by Peter Hobson
Editing by Edmund Blair and David Evans)
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