Friday, 31 July 2015 17:29
LONDON: Copper and most other base metals extended their downtrends on Friday on persistent worries about demand in top consumer China, leaving copper facing its biggest monthly loss since January.
Declines on the day were muted, however, as traders squared their books ahead of the month-end and Chinese factory data due to be released over the weekend.
Investors remained on edge about demand in top metals consumer China, after an official warned that risks from a slowing economy must not morph into social risks and as the volatile Chinese stock market fell again.
“I think in all the metals we are in an extended, excessive downward move, which may continue for some time,” said Eugen Weinberg, head of commodity research at Commerzbank in Frankfurt.
“It’s very difficult to call a bottom, especially given the insecurity and high volatility on Chinese equity markets and the somewhat stronger dollar in recent weeks.”
Three-month copper on the London Metal Exchange had slipped 0.5 percent to $ 5,233.50 a tonne by 1000 GMT, following a 1.3 percent loss the previous session.
LME copper is facing a 9 percent downturn for July, its weakest showing since January and the second-biggest drop since 2012. Miners’ output costs have dropped more than the industry consensus due to lower energy prices and weak emerging market currencies, research from Societe Generale showed.
“It’s unlikely that you’re getting cuts to supply at these levels because the mining community is just fine,” analyst Mark Keenan of Societe Generale in Singapore said.
Growth in China’s manufacturing sector likely steadied in July but remained at a subdued pace, a Reuters poll showed, fuelling hopes that a slowdown in the world’s second-largest economy may be gradually bottoming out.
In other metals, nickel shed 0.3 percent to $ 10,995 a tonne amid indications that weather event El Nino may ensure steady supplies from the Philippines.
The country, which has become the top ore supplier to China, may be able to extend its mining season until year end due to dryness linked to El Nino, instead of shutting due to seasonal rains.
“Nickel at $ 11,000, one must call it a screaming buy in the very long term, but I wouldn’t rule out that it could fall to $ 10,000 in coming days,” Weinberg said.
In other metals, LME tin, edged up 0.1 percent to $ 16,200 a tonne.
Prices have surged 16 percent so far this month on prospects of tighter supply, as smelters from top exporter Indonesia face export delays ahead of new regulation from August.
