MARKETS-METALS (UPDATE 4)
* Lower Chinese copper imports may be on the cards
* Central banks expected to tread carefully
* Coming up: U.S. February retail sales at 1330 GMT
(Adds official prices)
By Pratima Desai
LONDON, March 12 (Reuters) - Copper steadied on Friday as the market weighed demand prospects in top consumers China and the United States, given talk of tighter policy.
Benchmark copper on the London Metal Exchange traded at $7,498.5 a tonne in official rings from $7,464 at the close on Thursday. The metal used in power and construction hit a low of $7,405 a tonne earlier on Friday.
Doubts about Chinese copper demand have recently been growing and were reinforced this week by consumer inflation data from the country, which jumped to a 16-month high in February.
"It looks as if inflation is a growing concern within China and that the government is looking to apply the brakes," said Dan Brebner, analyst at Deutsche Bank. "That's creating some caution in the minds of Chinese manufacturers, traders."
China's imports of unwrought and semi-finished copper products rose 10.3 percent month-on-month in February, beating expectations of flat to lower levels.
But caution in China about government plans for monetary policy could translate into lower imports of copper over the next few months, analysts said.
Also causing nervousness is potentially tighter monetary policy in the United States, the world's largest economy, which could stall demand recovery.
"The market is trying to figure out how quickly this could happen," Brebner said. "But I think you will see central banks tread very carefully, because otherwise you will see growth impacted significantly." ANTICIPATION
Analysts say investor interest in base metals will be a strong support for copper as will falling stocks.
Stocks of copper in London Metal Exchange warehouses have fallen nearly 20,000 tonnes since March 1 to 532,575 tonnes.
"Looking at copper open interest over the past few months ... the key trend has been one of rising open interest and rising prices, essentially indicating that new long positions have been added," Standard Bank said in a note.
Open interest on copper contracts traded on the London Metal Exchange rose to 283,831 lots or 7.1 million tonnes on Monday, the highest since October 2008.
Open interest on lead contracts has also surged. It was at 91,680 lots or 2.3 million tonnes on Thursday. That again was the highest since October 2008.
Traders think investors are buying lead in anticipation of a demand recovery for batteries used by the auto sectors.
"Even if recovery stalls, the feeling is governments will keep scrappage schemes going as they serve a two-fold purpose," a trader said. "It keeps the factories going and it keeps people happy, buys votes."
Lead was at $2,280 a tonne from $2,251 on Thursday, stainless steel ingredient nickel at $21,795 from $21,295, zinc was bid at $2,356 from $2,337 and tin at $17,600 from $17,350 on Thursday.
Aluminium traded at $2,245 a tonne from $2,235. Prices of the metal used in transport and packaging are buoyed by financing deals which have tied up a significant proportion of LME stocks. Metal Prices at 1312 GMT Metal Last Change Percent Move End 2009 Ytd Percent
move COMEX Cu 338.35 1.75 +0.52 334.65 1.11 LME Alum 2240.00 5.00 +0.22 2230.00 0.45 LME Cu 7485.00 21.00 +0.28 7375.00 1.49 LME Lead 2273.00 22.00 +0.98 2432.00 -6.54 LME Nickel 21650.00 355.00 +1.67 18525.00 16.87 LME Tin 17525.00 175.00 +1.01 16950.00 3.39 LME Zinc 2351.00 14.00 +0.60 2560.00 -8.16 SHFE Alu 16750.00 30.00 +0.18 17160.00 -2.39 SHFE Cu* 59480.00 250.00 +0.42 59900.00 -0.70 SHFE Zin 18880.00 185.00 +0.99 21195.00 -10.92 ** 1st contract month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07 (Editing by Sue Thomas)
