Copper futures slid more than 1 percent in Asia on Monday, pushed lower by growing global stocks of the industrial metal and expectations that China's government would step in to cool economic growth. The country's economy expanded 9.5 percent in the year through the first quarter, leading many domestic traders to conclude that Beijing would introduce new measures to rein in red-hot growth. China raised interest rates in October for the first time in nine years and has implemented a series of tariff changes to reduce resource-inefficient, export-led metals production.
London Metal Exchange warehouse inventories have also been ticking up rising 10 percent on Friday pointing to slower demand for the red metal. Shanghai exchange warehouse inventories have so far stayed low.
"Physical markets are not so tight in Europe and, especially, in Japan. Only the Chinese market has been strong, but I hear that supplies there are not actually as tight as they appear," a Tokyo-based trader said.
"My view is not positive." Benchmark three-month copper on the London Metal Exchange traded at $3,240/$3,243 a tonne, as traders sold both LME and Shanghai copper futures. LME copper traded down in the hitting $3,233 a tonne.
A break through $3,230 a tonne could bring the contract down quickly to $3,185 a tonne, traders said. Strong support was seen at the 100-day moving average, $3,128 a tonne. Falling copper prices pressured other metals.
Aluminium was down $7.50 at $1,856/$1,860 a tonne, while nickel had shed $50 to $15,850/$15,950 a tonne. Zinc could test support this week at $1,280 a tonne if copper continued to fall, a Tokyo-based trader said.
On Monday, it fell $18.50 to $1,288/$1,295 a tonne. Shanghai copper futures dropped nearly 2 percent on Monday before rebounding. Most-active July traded at 32,470 yuan a tonne.
On Friday the July contract closed at 32,740 yuan and settled at 32,690 yuan. "Shanghai exchange warehouse levels could start to rise towards the end of this month. There was a week or so when imports would have been quite profitable," a Shanghai-based trader said.
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