Friday, 10 July 2015 17:46
LONDON: Copper slipped on Friday and was set for a weekly fall of about 3 percent as concerns persisted over top consumer China’s demand for the metal even as stock markets there recovered and in Europe hopes grew for a deal between Greece and its creditors.
Chinese stocks bounced sharply for a second day on Friday, regaining a degree of composure after a barrage of government support measures to halt panic selling earlier this week. Greek Prime Minister Alexis Tsipras appealed to his party’s lawmakers to back tough reforms after offering last-minute concessions to try to save the country from financial meltdown.
But in copper, worries about Chinese usage persist. “Fundamentals right now are clearly not good; there’s no doubt about that. Chinese demand looks bad this year because the State Reserves Bureau is not buying in the same way as last year,” said Nic Brown, head of commodities research at Natixis.
Three-month copper on the London Metal Exchange was last bid down 0.9 percent in official midday rings at $ 5,579 a tonne. Prices dropped to six-year lows of $ 5,240 on Wednesday.
Buyers of copper and aluminium in China reduced spot purchases in domestic and international markets this week after the country’s equities rout reduced liquidity for buying.
Also, inventories in warehouses monitored by the Shanghai Futures Exchange rose 3.7 percent from last Friday to 105,276 tonnes, reversing 13 straight weeks of falls.
On the plus side however, premiums for bonded copper in Shanghai climbed $ 5 to $ 70, the highest in a month, reflecting bargain hunting after copper’s price plunge.
Added to this, China traders could buy more copper from global markets in coming months as the sharp falls in LME copper have opened up a profitable import arbitrage. Aluminium traded down 0.2 percent at $ 1,695 a tonne in rings.
“China has been exporting large quantities of aluminium recently.
If aluminium prices were to remain low for any length of time, however, output would doubtless be cut in China after all — this at least is the consensus among local smelters, traders and refiners,” Commerzbank said in a note.
It added that production cuts could begin as soon as the end of July or early August if the aluminium price in Shanghai does not settle above 12,000 yuan per ton in the next few weeks.
Zinc was last bid down 0.2 percent in rings at $ 2,006 a tonne, lead traded down 0.2 percent in rings at $ 1,812 while nickel traded down 1.7 percent at $ 11,305.
