Mining Profits...Investing In Industrial Metals

Shanghai copper futures dropped
more than 1.5 percent to a two-week low on Friday, pressured
by
weakness in London Metal Exchange prices amid growing concerns
over the outlook for global economic growth.
 Both Shanghai metals futures and LME prices edged down as
falls in energy, gold and other commodities also hurt sentiment
for industrial metals, with traders closely watching the
outcome of a series of U.S. economic data due later in the day.
 The most active November Shanghai copper contract fell as
far as 67,840 yuan a tonne -- the lowest since August 31 --
before closing the morning session at 68,850 yuan.
 It was down 1,190 yuan, or 1.7 percent, from the previous
settlement of 70,040 yuan. It closed at 70,720 on Thursday.
 The technical trend weakened after falling below 70,000
yuan. The key Shanghai contract was down almost 10 percent from
last week's high of 75,200 yuan reached on September 7.
"Funds are shifting out from commodities in general and
base metals are no exception," said Naohiro Niimura, a vice
president at Mizuho Corporate Bank.
 Niimura said the market is focusing on U.S. economic data,
including consumer prices, to determine the outlook for copper
and other base metals.
 As of 0403 GMT, key three-month LME copper was trading at
$7,380/7,400 a tonne, down 0.5 percent from the London kerb
close of $7,420 on Thursday.
 Tokyo traders said end-users were detected buying around
Friday's low of around $7,300, but the market lacked energy to
post stronger gains as weak technicals have made funds
reluctant about building new positions in LME copper.
 Technical sentiment weakened, particularly after the
three-month LME contract decisively dipped below its 100-day
moving average (MA) earlier in the week for the first time
since June 2005.
 The 100-day MA, now around $7,570 on Friday, is becoming a
tough technical resistance.
 "It was significant after copper dropped below the 100-day
moving average, but I don't think copper will come under a
severe downtrend from here as there will be demand from
end-users," Mizuho's Niimura said.
 Weak energy prices also hurt sentiment for base metals.
Traders said investment funds are expected to be keen on
lightening their positions in base metals and other commodities
ahead of the end of the third quarter, with falls in energy
accelerating sell-offs in commodities.
U.S. crude oil futures were little changed above $63 a
barrel on Friday, after falling for the eighth time in nine
sessions a day earlier, as uncertainties over Iran's nuclear
row offset the impact of ample U.S. oil supplies.
 Shanghai copper and aluminium futures reacted little to
Thursday's news that China will reduce value-added tax rebates
granted to exports across a variety of sectors, including steel
and non-ferrous metals to 5, 8 or 11 percent from 13 percent.