Shanghai copper prices eased on Thursday after London futures dipped to a six-week low in the previous session on rising stocks and growth worries in major consumers. But a continuing strike in Mexico and soothing comments from the Federal Reserve helped to underpin sentiment.
The most active October contract on the Shanghai Futures Exchange was down 120 yuan or 0.2 percent at 65,960 yuan ($8,709) a tonne. Copper for delivery in three months on the London Metal Exchange was $30 higher lowers at $7,610 a tonne. On Wednesday the metal dipped to $7,531, it's weakest since late June. A sharp rise in LME stocks and an expected fall in Chinese copper imports for July all contributed to the weaker sentiment.
"Copper prices plummeted on Wednesday following a large increase in LME inventory," Standard Bank, London, said in a daily note. Stocks jumped by 8,675 tonnes to 114,275 tonnes, the highest in six weeks, following deliveries into LME warehouses in South Korea.
"While a seasonal build in exchange stocks is to be expected, the current negative Shanghai-LME arbitrage has seen much of this stock build enter the South Korean ports of Busman and Gwangyang, the closest LME warehouses," Standard said.
Traders were also bearish about preliminary Chinese trade data expected on Friday and said July imports could be down by 25 percent from the previous month, following a 130 percent rise in first half inflows.
"If there is a strongly negative report on Chinese imports, it could send the market down, but it will be a short term issue, Anything negative from China tends to weigh on the market," Gerard Burg, analyst at National Australia Bank said, noting yet another pledge by Chinese authorities to curb growth.
Comments from the US Federal Reserve this week that it is still worried about inflation and expects moderate growth helped temper the fears of a protracted credit squeeze.
"We remain worried about the United States and what slower growth may mean, but China is becoming ever more important for metals consumption and that strength should cushion a soft landing in the US for metals demand," Burg said.
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