Copper slips on US data, demand concerns

LONDON: Copper slipped on Friday, for a second week of losses, following economic data that showed US consumer sentiment dropped to its lowest in three decades, compounding concerns about global economic growth and demand from top consumer China.

Benchmark copper on the London Metal Exchange closed at $8,865 a tonne, from $8,881 at the close on Thursday.

Earlier this week the metal used in power and construction hit its lowest since early December last year, $8,446.25 a tonne, as the debt crisis in the euro zone escalated.

US consumer sentiment dropped in early August as fears of a stalled recovery combined with despair over government policies, a survey released on Friday showed.

"Any optimism is premature. We are not out of the woods yet, the economic path from now on is unclear," said Eugen Weinberg, commodities analyst at Commerzbank. "We've seen some bargain hunting, probably from the Chinese."

China accounts for nearly 40 percent of global copper demand estimated at around 19 million tonnes this year. Its absence from the international market has for months kept a lid on prices.

One school of thought holds that the country's consumers will soon be back buying after having used up their stocks and they will be helped by a stronger yuan against the dollar.

Others cite slowing manufacturing activity in China, due to tighter monetary policy to rein in inflation, as a reason consumers are likely to stay away.

China's copper imports rose 9.5 percent to a six-month high in July but were still down 22 percent on the year.

A slowdown in China rail investments, reports that China is cutting its target for the construction of public homes and the general impact of its tightening measures have all fuelled concerns that metals demand could be hit.

"All these little bits are adding up," said David Wilson, an analyst at Societe Generale.in China. European consumer spending has fallen. I think people in Europe are going to be cutting back expenditure over the next few months, because of nervousness about the state of growth," he added.

NEXT WEEK

For next week, metals are likely to remain tied to fluctuations in equities markets on an intraday basis and may be affected by a stream of US housing data. Short-term direction is likely to be muddied by thin trading during widespread holidays in most of mainland Europe on Monday.

"The wild swings in the equity markets are bound to continue at least for some time longer, making short-term forecasting even more difficult," analyst Ed Meir of MF Global said.

Aluminium ended at $2,400 a tonne from $2,413 at the close on Thursday.

A physical trader said premiums have not changed in weeks, quoted at around $200-230 for duty-paid. "It's the same as last week and the week before and the week before. It's just dead quiet," he said, adding that the massive influx into Vlissingen isn't having much of an impact on premiums.

Zinc ended at $2,177 from $2,186, lead was at $2,380 from $2,385 and nickel finished at $21,400 from $21,600.

Tin rallied 5 percent at one point on worries about restricted supplies from Indonesia, the world's largest exporter. It ended bid at $24,650 a tonne from $23,605 on Thursday, having hit a one-week high of $24,950 a tonne.

Indonesia said it would impose a new royalty charge on all tin shipments and only allow the export of refined tin.

Copyright Reuters, 2011