Metalnewsnet 15 Mar:

Copper softened on Friday as investors worried that China might tighten monetary policy and slow its metals demand, but currencies provided some support as a weak dollar cheapened base metals for non-U.S. investors.

Benchmark copper on the London Metal Exchange was last quoted at $7,440/7,445 a tonne from $7,464 at the close on Thursday. The metal used in power and construction hit a low of $7,405.50 earlier on Friday.

Supporting metals, the euro hit a one-month high against the dollar, which fell against a basket of major currencies.

Copper has struggled to make headway in recent sessions as investors worried red-hot growth and rising inflation could encourage China to tighten monetary policy, which could in turn hit copper imports.

Copper closed lower on Wednesday despite data that day showing China's imports of unwrought and semi-finished copper products rose 10.3 percent month-on-month in February, beating expectations.

"The economic prospects are a little bit shaky, some are concerned growth in China as we saw it over the last month will not be sustainable," said Eugen Weinberg, an analyst at Commerzbank. "Some expect further tightening in China soon, possibly in a question of weeks."

But analysts also say that even if China hikes rates this should not spook investors, as its monetary policy is still accommodative enough to support robust consumption.

"It's not tight," Weinberg said. "The problem is that the market has become accustomed to extremely lax policy."

Reinforcing concerns was data this week showing a surge in Chinese consumer inflation in February.

Market players are also concerned about potential tighter monetary policy in the United States, which could stall the already slow demand recovery in the world's largest economy. ANTICIPATION

Supporting copper were falling stocks and investor interest.

Stocks of copper in LME warehouses have fallen nearly 20,000 tonnes since March 1 to 532,575 tonnes.

LME stocks of copper, zinc, lead, tin, nickel and aluminium all fell on thursday.

Open interest on copper contracts traded on the LME rose to 283,831 lots or 7.1 million tonnes on Monday, the highest since October 2008.

"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 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 said investors are buying lead in anticipation of a demand recovery for batteries used by the auto sectors.

Zinc was at $2,335 in official rings from $2,337 on Thursday and battery material lead was at $2,265 a tonne from $2,251. Tin at $17,550 from $17,350 and stainless steel ingredient nickel was at $21,750 from $21,295.

Aluminium traded at $2,260.50 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.

(From Reuters)