Copper steadies, focus on Chinese demand
LONDON – Copper prices steadied on Friday, after rising more than 1% in the previous session following reassuring manufacturing data from China, but continued concerns about slow demand from the metal’s top consumer prevented further gains.
Benchmark copper on the London Metal Exchange dipped 0.1 to $8 618.50/t at 1026 GMT, from Thursday’s close of $8 630/t.
The metal earlier hit a session high of $8 670/t, not far from the year’s peak of $8 765 reached in early February. The metal has gained more than 13% so far this year.
But demand from China, which consumes 40% of the world’s copper, has yet to pick up strongly after the Lunar New Year in January, raising worries that prices could retreat sharply.
Data released on Thursday, which showed an index measuring China’s manufacturing activity at a five-month high, served to moderate the concerns about an economic slowdown.
Analysts said the direction for the weeks ahead will be driven by macroeconomic data and investors will look for signs of any increase in copper demand from China.
“If we were to get a few more numbers that were a bit disappointing the markets would start to become nervous about the growth outlook so price direction over the next couple of weeks is going to be very much influenced by the flow of economic news,” said Gayle Berry, analyst at Barclays Capital.
Also weighing on prices was a drop in the euro versus the dollar. A strong dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.
Copper is heading for its second straight weekly gain, which at 1.3% so far would be the smallest weekly rise since early February.
Some analysts said copper will remain trapped in narrow ranges unless Chinese demand perks up.
“Copper is a flat story at the moment. Chinese demand used to be the driver, but now it looks like it’s a dragger,” said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.
SHANGHAI INVENTORIES RISE
Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.5% to 221 487 t, weekly data from the exchange showed on Friday, the highest level since August 2002.
“It’s a combination of too much metal having been imported and a slow recovery in buying after the Chinese New Year,” Barcap’s Berry said.
“The big question going forward is whether we see a seasonal pickup in demand. And if so how quickly that bonded metal gets sucked into the system because that is going to be a big influence over copper prices over the next few months.”
Meanwhile, copper stocks in warehouses monitored by the LME fell to a two-and-a-half year low of 289 000 t, down 3 250 t, with the ratio of cancelled warrants to total stocks at 34.31%, with most of the tonnage in US locations.
In other metals, aluminium slipped to $2 344 from Thursday’s close of $2 353/t.
Zinc was at $2 118.25 from Thursday’s close of $2 105/t, while lead was at $2 183 from $2 163/t.
Tin was at $23 800 from a close of $23 775 while nickel was at $19 548 from $19 500.
Edited by: Reuters
Benchmark copper on the London Metal Exchange dipped 0.1 to $8 618.50/t at 1026 GMT, from Thursday’s close of $8 630/t.
The metal earlier hit a session high of $8 670/t, not far from the year’s peak of $8 765 reached in early February. The metal has gained more than 13% so far this year.
But demand from China, which consumes 40% of the world’s copper, has yet to pick up strongly after the Lunar New Year in January, raising worries that prices could retreat sharply.
Data released on Thursday, which showed an index measuring China’s manufacturing activity at a five-month high, served to moderate the concerns about an economic slowdown.
Analysts said the direction for the weeks ahead will be driven by macroeconomic data and investors will look for signs of any increase in copper demand from China.
“If we were to get a few more numbers that were a bit disappointing the markets would start to become nervous about the growth outlook so price direction over the next couple of weeks is going to be very much influenced by the flow of economic news,” said Gayle Berry, analyst at Barclays Capital.
Also weighing on prices was a drop in the euro versus the dollar. A strong dollar makes commodities priced in the U.S. unit cheaper for holders of other currencies.
Copper is heading for its second straight weekly gain, which at 1.3% so far would be the smallest weekly rise since early February.
Some analysts said copper will remain trapped in narrow ranges unless Chinese demand perks up.
“Copper is a flat story at the moment. Chinese demand used to be the driver, but now it looks like it’s a dragger,” said Henry Liu, head of commodity research at Mirae Asset Securities in Hong Kong.
SHANGHAI INVENTORIES RISE
Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 2.5% to 221 487 t, weekly data from the exchange showed on Friday, the highest level since August 2002.
“It’s a combination of too much metal having been imported and a slow recovery in buying after the Chinese New Year,” Barcap’s Berry said.
“The big question going forward is whether we see a seasonal pickup in demand. And if so how quickly that bonded metal gets sucked into the system because that is going to be a big influence over copper prices over the next few months.”
Meanwhile, copper stocks in warehouses monitored by the LME fell to a two-and-a-half year low of 289 000 t, down 3 250 t, with the ratio of cancelled warrants to total stocks at 34.31%, with most of the tonnage in US locations.
In other metals, aluminium slipped to $2 344 from Thursday’s close of $2 353/t.
Zinc was at $2 118.25 from Thursday’s close of $2 105/t, while lead was at $2 183 from $2 163/t.
Tin was at $23 800 from a close of $23 775 while nickel was at $19 548 from $19 500.
Edited by: Reuters
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