Copper was steady on Monday with buyers attracted by low prices after a sharp drop last week, but persistent concerns about top consumer China's growth outlook kept the metal within sight of the near four-year low it hit last week. Copper fell sharply last week after a Chinese bond default sparked fears financiers in the country would unwind financing deals that use the metal as collateral. The market was already edgy over slowing demand for copper in China, the world's largest consumer of the metal.
Benchmark three-month copper on the London Metal Exchange closed at $6,479 a tonne, off an intraday low of $6,410 a tonne and up a touch from a last bid of $6,468.50 on Friday. It fell to $6,376.25 a tonne on March 12 - its lowest since July 2010 and is down close to 12 percent so far this year. The low prices attracted buyers on Friday and Monday, and some analysts believe that the metal will find support around current levels.
"We've seen evidence of consumer buying at the end of last week, and I think there's support around the $6,500 level where we are now, given the dramatic fall last week," said Vicky Sanders, head of analytics sales at Marex Spectron. "We could be seeing a bit of a floor here." In a development that supported prices, Beijing announced plans to speed up the pace of urbanisation. The government outlined infrastructure investment plans aimed at raising the proportion of the population living in cities to 60 percent by 2020 from 53.7 percent now.
Copper is used mostly in electrical wiring, roofing, plumbing and industrial machinery and any urbanisation plan would boost demand for the metal. There were also some signs of improving domestic Chinese demand, with local prices for physical metal trading at a premium to front-month ShFE futures prices, compared with a discount for the past month. But appetite did not yet extend to global copper inventories. Premiums for copper held in Shanghai bonded warehouses slipped by $5 from Friday to $120-$140 a tonne, according to China price provider Shmet.
Beijing is expected to act if growth slows below its targets. "Due to the poor economic performance in January-March, the GDP growth rate for the first quarter might be not able to meet the government's requirements, and we might see policies that act as support for prices in future," analyst Chunlan Li at consultancy CRU in Beijing said. Still, US speculators added to their bearish view on copper. The Commodity Futures Trading Commission's Commitments of Traders report in the week to March 11 showed speculators increased net short positions in copper. Political tensions were in the spotlight as Crimea formally applied to join Russia on Monday after its leaders declared a Soviet-style 97 percent vote in favour of quitting Ukraine.
World stocks rose from a one-month low and the yen slipped as risky assets bounced, relieved that Sunday's referendum in Crimea passed without major violence but waiting to see whether Western powers will impose sanctions on Russia. Benchmark three-month aluminium closed at $1,724.50 a tonne from Friday's close of $1,740, zinc at $1,966 from $1,980 and lead at $2,059 from $2,041. Nickel closed at $15,880 a tonne from a last bid of $15,740 on Friday and tin at $22,975 from $22,925.
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