Friday, 17 July 2015 19:54
LONDON: Copper prices slipped on Friday, pressured by uncertainty over demand from top consumer China and a firmer dollar, but a Chinese stock market recovery is expected to curb the metal’s losses.
Benchmark copper on the London Metal Exchange was down 1 percent at $ 5,497 a tonne at 1423 GMT from $ 5,560 at Thursday’s close. The metal, used in power and construction, hit a six-year low of $ 5,240 last week.
“There is potential for more downside in copper. It really does come down to China, which has slowed more than expected, particularly on the industrial side,” John Meyer, mining analyst at SP Angel, said. “It would appear some infrastructure projects have been delayed.” Chinese equities ended higher for a second week.
The dollar reversed early losses after data showed US consumer prices increased for the fifth month running, strengthening the case for the Federal Reserve to raise interest rates this year.
A firmer dollar weighs on dollar-priced metals by making them more expensive for buyers holding other currencies.
Data earlier this week showed China’s economy grew by an annual 7 percent in the second quarter, beating a 6.9 percent consensus. But analysts remain sceptical.
“What matters is that the Chinese policymakers are throwing the proverbial kitchen sink at a spluttering economy and a faltering stock market,” Societe Generale strategist Albert Edwards said in a note.
“So far investors have failed to appreciate the futility of their efforts.” Also weighing on copper are a seasonal demand lull and stocks in LME-approved warehouses, which at around 340,325 tonnes are up about 90 percent from levels seen in January.
Three-month aluminium was down at $ 1,705 from $ 1,716. Zinc traded at $ 2,067 from $ 2,073, lead at $ 1,835 from $ 1,840 and nickel at $ 11,510 from $ 11,630.
Tin bucked the trend, bolstered by low stocks and some confidence that Indonesian exports would fall from August due to new rules.
It gained more than 3 percent to $ 15,645, from $ 15,150 on Thursday.
Traders say the premium for cash metal over the three-month tin contract, at $ 49 a tonne on Thursday, is not due to a shortage of material for nearby delivery, but more because of position adjustments along the maturity curve.
