Copper eases, doubts about China demand dominates
LONDON: Copper fell on Wednesday to its lowest in nearly two weeks, as investors worried about a lack of demand from top global metals buyer China.
Benchmark copper on the London Metal Exchange closed at $9,381 a tonne from $9,590 a tonne at Tuesday's close, on track for a 5-per cent fall in March, its first monthly decline since June 2010.
It earlier hit its lowest since March 17, at $9,341 a tonne, some 8 per cent below a record high of $10,190 hit on Feb. 15.
"All the bets were put on China," said Eugen Weinberg, an analyst at Commerzbank. "Sentiment in China is not as rosy and not as upbeat as sentiment in Europe or the US," he added.
China has been absent from the copper market for some months now, and analysts and traders are beginning to question whether it will come back before prices fall further.
Analysts also pointed to an abundance of copper stocks in China. "We are cautious on copper's outlook ... It could be just be monetary tightening impacting on the copper market," said Nic Brown, an analyst at Natixis. "It could be a reflection of copper stockpiles built up in 2009 and now being run down." Shanghai copper gains Three-month copper on the London Metal Exchange edged down $4.5 to $9,585.50 a tonne by 0701 GMT. Shanghai's most-active copper futures contract gained 0.7 per cent to 71,300 yuan ($10,868).
China's State Reserves Bureau and consumers are expected by analysts to have built up large stocks of copper in 2009, when prices ranged between $3,000 and $7,500 a tonne.
"The market is nervous, watching and waiting, not sure China is in the market for copper this year," a trader said.
He added: "The crisis in Japan and the Middle East is keeping investors away. They are waiting to see the impact on growth overall from what's going on in these places."
Also in the spotlight are stocks of copper in London Metal Exchange warehouses, which are near 440,000 tonnes, up more than 25 per cent since early December and at their highest since July last year.
Zinc closed at $2,338 a tonne from $2,375 and lead, untraded at the close, was last bid at $2,655 a tonne from $2,685.
Tin closed at $31,250 a tonne from Tuesday's last bid at $31,550 and stainless steel ingredient nickel was at $26,030 a tonne from $26,600.
Aluminium hit a high of $2,654 a tonne from $2,648 on Tuesday when it saw $2,656 a tonne, its highest since September 2008. The metal used in transport, packaging and construction closed at $2,629 a tonne. -Reuters