LONDON: Copper prices retreated on Monday after feeble economic data from top metals consumer China kept a lid on demand expectations.
Three-month copper on the London Metal Exchange (LME) dropped 2.2% to $8,486.50 per metric ton by 1600 GMT, after rising 3.6% last week.
“Certainly we had weaker-than-expected GDP numbers and so far there’s not been huge amounts of stimulus announced,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International in London.
“We have not changed our view of expecting more tailored and targeted stimulus despite the weaker numbers. Overall, the main aim is to maintain stability rather than have a big boost or double-digit growth like in previous years.”
Second-quarter data on Monday showed China’s economy grew only 0.8% from the previous quarter as demand weakened at home and abroad, with post-COVID momentum faltering rapidly and raising pressure on policymakers to deliver more stimulus.
Base metals slumped despite a weaker dollar, which hovered around 15-month lows after its biggest weekly drop of the year.
A softer dollar typically supports commodities priced in the US currency, making them cheaper to buyers holding other currencies.
Also pressuring base metals was data showing China’s non-ferrous output last month continued to rise year-on-year, including aluminium. The increasing supplies and tepid demand raised expectations of growing inventories.
Excess supply in the spot market is pushing down the spot premium and weighing on futures prices, said analysts at Meierya Futures.
The Chinese copper spot market last week moved to a discount of 40 yuan a metric ton against the SHFE price, a five-month low.
Aluminium pared losses after a Bloomberg report said that a unit of state-owned Aluminum Corp of China had terminated some aluminium contracts amid government-led investigation into deals in the market.
LME aluminium dropped 0.9% to $2,255 a metric ton after touching an intra-day low of $2,235.
LME zinc shed 1.4% to $2,405.50, lead retreated 1.3% to $2,096 while nickel slid by 2.8% to $21,035 and tin fell 0.7% to $28,345.
Source: Brecorder
