Copper dips

Copper dipped near to three-month lows on Monday as expectations of a growing surplus of the metal and a lack of immediate measures to boost commodities demand in China's reform package offset a softer dollar. Three-month copper on the London Metal Exchange closed down 0.5 percent at $6,975 a tonne. It had fallen to a three-month low of $6,940 last Thursday and was last week's worst performer in the base metals complex.
Beijing unwrapped its boldest set of economic and social reforms in nearly three decades on Friday, relaxing its one-child policy and freeing up markets further to put the world's No 2 economy on a more stable footing. The reforms may take years, however.
"We knew that the reforms would be positive, but I tend to think the markets wanted more concrete ideas. They didn't get them, therefore markets sold off," said Jonathan Barratt, chief executive of commodity research firm Barratt's Bulletin. The dollar and yen fell on Monday against growth-linked currencies that drew support from higher stock markets as investors cheered prospects of more economic reform in China. A weaker US currency makes it cheaper for foreign investors to buy dollar-priced commodities, thus supporting prices.
The supply situation was hammered home with China's Jiangxi Copper and Freeport McMoRan agreeing to treatment and refining charges (TC/RCs) of $92 a tonne and 9.2 cents per pound for copper concentrate shipments in 2014, up 31 percent from this year. Analysts polled by Reuters expect the copper market to post a surplus of 182,000 tonnes this year, up from a previous forecast of 153,000 tonnes, before ballooning to 328,000 tonnes in 2014. Hedge funds and money managers turned copper into a net short for the week ended November 12, a report by the Commodity Futures Trading Commission showed.
Offering some support to copper prices was a shutdown of Glencore Xstrata's PASAR copper smelter and refinery in the Philippines, after it sustained structural damage during Typhoon Haiyan, and questions over China's production, Standard Bank said in a note. China's refined copper output may have increased by more than 15 percent this year, smelter sources said.
"Rather than the start of a capitulation, we believe that prices are at worst settling into a new sideways trading range, with the risk in our view still lying to the upside as we head towards year-end," Standard Bank added. Among other metals, nickel was the biggest loser, dropping 1.7 percent to close at $13,590 a tonne after earlier touching a session low of $13,580, the weakest since October 4. Tin ended 1.2 percent down at $22,750 a tonne, lead fell 0.7 percent to $2,081 and zinc shed 0.8 percent to $1,884. Aluminium failed to trade in closing open outcry activity and was last bid at $1,783 a tonne, down 0.4 percent.