Copper fell more than 1 percent on Monday after top consumer China shaved its economic growth outlook for this year, and as Europe showed signs of edging back towards recession. Three-month copper on the London Metal Exchange closed at $8,505 a tonne, from $8,580 at the close on Friday.
The metal has risen nearly 13 percent this year, helped by increased liquidity across markets as centtral banks try to spur growth. Chinese Premier Wen Jiabao cut the growth target to 7.5 percent for 2012, from the 8 percent set in the previous eight years, to give the economy room to slow if needed, while the government carries out promised economic and welfare reforms ahead of a looming leadership transition.
"In many respects they're readjusting market (expectations) away from the fixations on the 8 percent (growth) figure. They're trying to engineer a soft landing and so far they're on track," said Credit Suisse analyst Tom Kendall. But money managers, including hedge funds and other large speculators raised their bullish bets in copper by 2,358 lots to 15,618 contracts in the week to February 28, as the price of the red metal rose.
"It will be important for the sector to get some confirmation that the economic recovery continues. In this context, all eyes will be on US non-farm payrolls this Friday," said Credit Suisse in a note. Other analysts said that rising copper stockpiles in China suggested importers were positioning themselves for a recovery in demand rather than being an indication of sluggish consumption.
"We don't see further big increases in Shanghai copper stocks, because we're now coming into peak consumption season in China," said Matt Fusarelli, an analyst at AME Group. Aluminium closed at $2,290 a tonne from $2,328. It remained supported by smelter closures, although as LME stocks data showed, it is still in chronic oversupply.
Saudi Arabian Mining Co (Maaden) and US-based Alcoa have signed a letter of intent for South Korea's Hyundai Engineering and Construction to build an alumina refinery at their aluminium complex in Saudi Arabia. Stainless-steel ingredient nickel closed at $19,075 a tonne from $19,450 on Friday. "We continue to be friendly to the complex, while nickel is of some concern. While still holding above its 100-day moving average, nickel has not been able to stage a lasting rally from the lows seen earlier (last) week," RBC Capital Markets said in a note. Soldering metal tin closed at $23,050 a tonne from $23,725, while zinc, used in galvanising, ended at $2,087 a tonne from $2,119, and battery material lead closed at $2,146 from $2,183.
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