Tuesday, 01 September 2015 17:10
LONDON: Copper prices fell on Tuesday as expectations of weak demand from top consumer China were fuelled by data showing the country’s manufacturing sector contracting at its fastest pace in three years.
Benchmark copper on the London Metal Exchange (LME) traded at $ 5,097 a tonne by 0941 GMT, down 0.7 percent from Friday’s close.
The metal used in power and construction hit a six-year low of $ 4,855 last week.
“Looking at fundamentals, China and demand, it’s not looking terribly healthy,” said Sergey Raevskiy, metals research analyst at SP Angel. China’s official manufacturing Purchasing Managers’ Index fell to 49.7 in August, from 50.0 in July.
The new orders component – a proxy for domestic and foreign demand – fell to 49.7 in August from July’s 49.9. New export orders contracted for an 11th straight month.
Negative sentiment on China can be seen in the country’s equity markets, which started September with losses, tumbling 5 percent at one point.
The markets appeared unimpressed by fresh stimulus measures that included further relaxation in property investment rules, as well as policies to support mergers, acquisitions and share buybacks by listed companies.
“Commodity prices have been buffeted by volatile swings in Chinese equity and FX markets, as well concerns regarding underlying growth and policy response,” Citi said in a note.
Expectations of a strengthening dollar on the prospects for an in interest rate increase in the United States is another negative.
A stronger US currency makes dollar-denominated copper more expensive for non-US businesses.
Three-month aluminium fell to $ 1,592 a tonne from Friday’s $ 1,603, zinc firmed to $ 1,825 from $ 1,809, lead was little changed at $ 1,732 and tin softened to $ 14,200 from $ 14,250.
Nickel tumbled 2.4 percent to $ 9,815 a tonne from $ 10,075 on jitters over demand from Chinese stainless steel mills and rising stocks.
The price has fallen more than 30 percent since the start of the year. Stocks of nickel in LME-approved warehouses, at 453,894 tonnes, account for about three months of global consumption estimated to be about 1.9 million tonnes this year.
Morgan Stanley expects the nickel market to have a surplus of 5,100 tonnes this year.
