Friday, 04 September 2015 17:02
LONDON: Copper and other industrial metals slumped on Friday on caution over the prospects of an increase to US interest rates and the reopening of the hard-hit Chinese stock market next week. Global shares slid ahead of what was expected to be a strong set of US jobs data that could provide the impetus for the Federal Reserve to raise rates from their record low.
The Chinese stock market, which reopens on Monday after a two-day closure, has taken a battering on recent economic signals and data due in the coming weeks is expected to point to further weakness in the economy of the world’s biggest metals consumer.
“The market’s getting a bit uneasy about the fact that there’s already been a lot of stimulus but the Chinese economy is continuing to slow,” said Robin Bhar, head of metals research at Societe Generale in London.
Three-month copper on the London Metal Exchange (LME) was down 1.5 percent at $ 5,166.50 a tonne by 1011 GMT, eroding the previous session’s 2.4 percent gain on the back of short-covering.
“If this is pretty much the extent of any short-covering, we could see prices come under pressure again. I think the shorts will probably wait to reassess what they do now,” SocGen’s Bhar said.
Thursday’s rally lifted copper from six-year lows below $ 5,000 a tonne last week, but a brighter US non-farm payrolls report could drive prices lower if it bolsters the case for a September rate hike and lifts the dollar.
A strong dollar erodes the purchasing power of commodities buyers paying with other currencies.
The Shanghai Futures Exchange was closed for a second day as China celebrates the anniversary of the end of World War Two, while US markets will be closed for a Labor Day break on Monday.
“It seems many of the metals had their ‘moment in the sunshine’ yesterday with short-covering rallies that look to be finished for the time being,” Kingdom Futures said in a note.
Other metals also fell, with LME nickel down 1.3 percent at $ 9,870 a tonne, aluminium off 0.2 percent at $ 1,626.50 and tin sliding 1.8 percent to $ 14,925.
Traders said that business remained slow, with little in the way of a demand upturn as China exits the slow summer season.
