LONDON, Nov 20 (Reuters) - Copper prices steadied on Friday, buoyed by expectations of stronger demand next year, further investment flows and a weaker dollar over coming months.
Benchmark copper on the London Metal Exchange was untraded in the rings, but bid at $6,755 in official rings from $6,790 a tonne at the close on Thursday. The metal used in power and construction earlier this week hit $6,992 a tonne.
Government fiscal packages -- especially in China, the world's largest consumer of industrial metals -- are expected to start feeding through into real demand next year.
"Demand will come back, there will be stimulus to aid certain struggling sectors and key companies next year," said John Meyer, analyst at investment bank Fairfax. "We see fresh fund flows into the market."
Industrial metals alongside other commodities have been helped up by a tumbling dollar, which makes metals priced in dollars cheaper for holders of other currencies and fund flows as investors look to rebalance their portfolios.
New investment money looking for a hedge against inflationary pressures created by loose monetary and fiscal policy has also helped fuel commodity price rises.
But rising stocks of copper in LME warehouses -- above 420,000 tonnes, up more than 60 percent since the middle of July and the highest since April -- will dampen sentiment.
Traders said the market was talking about further deliveries into LME warehouses in Korea, which could be coming from China.
Also on the radar is a bout of profit taking from hedge funds before their year end on Nov. 30. Profits have to be realised before performance fees can be charged.
"Most of the selling will be before Thanksgiving (next Thursday in the United States), as I'm sure a lot of people will take the opportunity for a long weekend," a trader said.
POWER
Stocks of aluminium at 4.59 million tonnes are still within touching distance of the record 4.629 million tonnes seen on Sept. 16 and expected to cap prices of the metal used in transport and packaging.
But news that China will raise power prices for non-residential users by around 5.4 percent could help bolster aluminium prices.
"We believe that the power tariff increase would materially increase the cost of production of aluminium smelters (by some $50 a tonne) in China where power costs account for more than 35 percent of total costs," Liberum Capital said in a note.
"This augurs well for the aluminium price which is currently being dampened by the inventory overhang and overcapacity."
Aluminium traded at $2,015 in official rings, little changed from Thursday's $2,031.
Zinc was helped by the threat of falling supplies from China, partly because of a potential shortage of zinc concentrate from Australia.
The metal used to galvanise steel was bid at $2,225 a tonne from $2,215, battery material lead traded at $2,339 from $2,332, tin traded at $14,940 from $14,860 and nickel was bid at $16,705 from $16,975.
Nickel prices are down about 25 percent since hitting a year high in August because of rising stocks of the metal used mainly to make stainless steel.
Stocks are expected to head for historical highs above 150,000 tonnes.
Metal Prices at 1318 GMT Metal Last Change Percent Move End 2008 Ytd Percent
move COMEX Cu 309.40 -1.00 -0.32 139.50 121.79 LME Alum 2069.00 39.00 +1.92 1535.00 34.79 LME Cu 6950.00 95.00 +1.39 3060.00 127.12 LME Lead 2412.00 22.00 +0.92 999.00 141.44 LME Nickel 17235.00 435.00 +2.59 11700.00 47.31 LME Tin 0.00 -14750.00 -100.00 10700.00 -100.00 LME Zinc 2273.00 -6.00 -0.26 1208.00 88.16 SHFE Alu 15515.00 130.00 +0.84 11540.00 34.45 SHFE Cu* 53940.00 740.00 +1.39 23840.00 126.26 SHFE Zin 17835.00 295.00 +1.68 10120.00 76.24 ** 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)
