Market and product

Copper, aluminium sink to one-month lows ahead of China data

10:55 PM @ Wednesday - 30 September, 2015

* Aluminium faces more losses as technical worsen -Triland

* Zinc hits lowest levels in over five years

LONDON (Reuters) - Copper and aluminium slid to one month lows on Monday while zinc hit its weakest level in more than five years on worries about upcoming data that may show weak industrial activity in top metals consumer China.

Data on Thursday is likely to show that China's giant factory sector shrank for the second month in a row in September, according to a Reuters poll,

"The market is looking for direction and probably the most likely source of that is Chinese data," said Caroline Bain, senior commodities economist at Capital Economics in London.

"We've had quite a bit of stimulus already and it hasn't yet been reflected in any sort of rebound in activity. We're going to need some improvement in data before we have any rebound in prices."

Three-month copper on the London Metal Exchange dropped 1.6 percent to $4,945 a tonne in official midday trading, the weakest since Aug. 26. Prices hit six-year lows at $4,855 last month.

Shanghai Futures Exchange copper slid by 1.5 percent to 38,310 yuan ($6,016.02) a tonne. The ShFE will close for a week starting Oct. 1 for China's mid-autumn festival.

The absence of the world's biggest metals user from Thursday and a rash of third-quarter U.S. earnings reports expected to show companies are struggling may further weigh on prices.

"The (price) recoveries we've seen over the past couple of months have been pretty short-lived," said strategist Daniel Hynes of ANZ in Sydney.

Profits earned by Chinese industrial companies declined at the sharpest rate in four years in August as costs kept rising and product prices kept falling.

Aluminium dropped 1.1 percent to $1,549 a tonne in official rings, also hitting the lowest in a month, as broker Triland said in a note prices look set to test new lows.

"Aluminum... remains stuck in a classic bear market with the whole range of commodity assets near or at multi-year lows."

Zinc, which failed to trade in official rings, fell 1.9 percent to $1,602, the weakest since June 2010.

Lead, the best performer this year among LME base metals and also untraded in official rings, was bid down 1.7 percent at $1,637.

"With mine output continuing to be stifled and stocks relatively low, we think that lead prices should be fairly well supported into year-end, allowing for an average of about $1,800/t in Q4," analyst Vivienne Lloyd at Macquarie said in a note.

Nickel shed 0.8 percent to $9,900 a tonne in official trading, while tin was unchanged at $15,100.