Copper steadied on Monday, following small losses in Asia, as European markets found firmer footing on the basis that the credit rating cut for nine eurozone nations by agency Standard & Poor's was already priced in. The most-traded April copper contract on the Shanghai Futures Exchange inched up 0.05 percent to 58,030 yuan ($9,200) a tonne.
"The downgrade hasn't come as a surprise. It was mooted on December 5," said Daniel Briesemann, an analyst at Commerzbank. "But because of new year holidays in China, the market will cool down and with the low liquidity we should also see lower interest and probably lower prices," he added.
Prices had declined in Asian trading because of a lack of purchases by Chinese consumers before the start of a week-long holiday in the world's largest user of the metal, and investor concern that European markets may tumble in reaction to last week's ratings downgrade. "After Chinese New Year I expect to see prices picking up again, because demand is still there and quite robust," Briesemann said.
Speculators in copper remained bearish, a bet they have held on to for almost 20 weeks, as demand prospects continued to be clouded by Europe's debt crisis and signs of slowing growth in top consumer China, US Commodity Futures Trading Commission (CFTC) figures showed on Friday. They increased those shorts by 454 contracts to 2,465 lots. Front-month copper in Shanghai fell into a discount against the most actively traded third month contract last week, having traded mostly at a premium since August, signalling demand is tailing off heading into the Lunar New Year.
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