February 6, 2018 / 6:21 AM / 12 days ago

METALS-Metals buckle as 'risk off', strong dollar bite

 (Adds Shanghai closing prices, updates London prices)
    By Melanie Burton
    MELBOURNE, Feb 6 (Reuters) - London nickel fell sharply on
Tuesday, leading the base metals complex lower as "risk off"
sentiment soured share markets and safe-haven buying lifted the
dollar. 
    The dollar has risen as a rout in global equities prompted
anxious investors to cut exposure to riskier assets and seek
shelter in the relative safety of the greenback. A stronger
dollar makes commodities more expensive for buyers holding other
currencies.
    But given a pick-up in global manufacturing and supply
shortfalls in some metals, Citibank suggested dips offered an
opportunity to buy. 
    "The recent sell-off in rates and equities, and a spike in
VIX (a volatility index) present an opportunity to rotate into
industrial metals," it said in a report. 
    "We recommend asset managers raise their exposure to
industrial metals over the coming month, particularly at the
expense of bonds and other fixed income, consistent with... our
own constructive 1H18 outlook for industrial metals – most
notably towards zinc and copper."
    
    FUNDAMENTALS
    * COPPER: London Metal Exchange copper was down 1.2
percent at $7,080.50 a tonne, as of 0711 GMT, paring gains of
1.8 percent from the previous session and still holding above
the $7,000 mark that has acted as a price floor for most of the
year. 
    Shanghai Futures Exchange copper erased overnight
gains to close down 0.5 percent at 52,750 yuan ($8,395.80) a
tonne.
    * NICKEL: LME nickel fell as much as 3.6 percent in
early trade and was down 2.7 percent at $13,380 a tonne. Any
break of support at Friday's low of $13,185 would take prices
back to Jan. 24 levels. Prices in January struck a 2-1/2-year
top at $14,000 a tonne. Other LME metals dropped between 1
percent and 2 percent.  
    * SUPPORT: Steel-related commodities were among a handful
that managed to evade the global market rout that followed Wall
Street's biggest decline since 2011.
    * CHINA IMPORTS: Traders noted that the import window for
copper into China is open, potentially supporting prices. One
saw limited inflows given traders will not want to risk holding
stock over the Lunar New Year holidays, which start on Feb. 15.
    * ALUMINIUM: Russian aluminium giant Rusal plans
to boost the share of value-added products (VAP) to between 50
percent to 52 percent of total aluminium sales this year from 47
percent in 2017 because of strong demand and its new VAP
capacity, it said on Monday.
    * DRC: Mining companies operating in Democratic Republic of
Congo are mounting a coordinated campaign against a new mining
code they say will stifle investment there, Randgold's
chief executive told Reuters.
   * For the top stories in metals and other news, click       
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    PRICES
 BASE METALS PRICES                         0712 GMT
 Three month LME copper                         7089
 Most active ShFE copper                       52750
 Three month LME aluminium                      2190
 Most active ShFE aluminium                    14135
 Three month LME zinc                           3491
 Most active ShFE zinc                         26550
 Three month LME lead                         2623.5
 Most active ShFE lead                         19455
 Three month LME nickel                        13375
 Most active ShFE nickel                      101240
 Three month LME tin                           21685
 Most active ShFE tin                         149940
                                                    
 BASE METALS ARBITRAGE                              
 LME/SHFE COPPER              LMESHFCUc3      924.01
 LME/SHFE ALUMINIUM           LMESHFALc3    -1779.01
                                          
 LME/SHFE ZINC                LMESHFZNc3      486.17
 LME/SHFE LEAD                LMESHFPBc3     -380.84
 LME/SHFE NICKEL              LMESHFNIc3     1568.79
                                          
 

($1 = 6.2829 Chinese yuan)

    
 (Reporting by Melanie Burton, additional reporting by Tom Daly
in BEIJING,; Editing by Christian Schmollinger and Sherry
Jacob-Phillips)
  
 
 
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