Copper slipped on Tuesday, on track for its steepest monthly loss since March, weighed down by a strong dollar and renewed signs of rising global supply and slack demand from China, where a factory survey was revised down slightly. The dollar reached a two-year high against the euro after euro zone annual inflation came in at just 0.3 percent in September, within the European Central Bank's "danger zone" of below 1 percent.
A strong dollar makes dollar-priced metals costlier for non-US investors. Three-month copper on the London Metal Exchange slipped by 0.12 percent to $6,734 a tonne by 0945 GMT, after small gains in the previous session. Prices hit their lowest since June 16 at $6,666 a tonne on Monday.
"There's not a whole lot of positive near-term indicators to get the copper market to rebound," Nomura metals and mining analyst Patrick Jones said. "We're getting to the point now where we have meaningful new supply starting to hit the market, the import arbitrage between Shanghai and London is out of the money, and the Chinese property market is still worrisome," he said. In China, an HSBC private survey of manufacturing (PMI) for September disappointed slightly by showing a final reading of 50.2, steady on August but down from its preliminary 50.5.
China consumes around 45 percent of the world's copper. The official version of the PMI is due on Wednesday, and analysts expect a steady outcome of around 51.0. In supply news, Newmont Mining Corp sent out its first copper concentrate shipment from Indonesia this week, ending a nine-month hiatus. Japan's top smelter Pan Pacific Copper said it aimed to raise copper treatment and refining charges by over 9 percent as it cashes in on rising mine supply.
Traders, meanwhile, were squaring their books ahead of a week-long holiday in China. The ShFE will be closed from Wednesday. In the wider markets, global equities fell on Tuesday as tens of thousands of pro-democracy protesters blocked Hong Kong streets in one of the biggest political challenges to Beijing since the Tiananmen Square crackdown. Iron ore prices, seen as early indicators of industrial demand, were on track to end September with their biggest monthly loss since May after falling to their lowest since 2009 in a rout that traders say looks likely to continue. A cooling property sector has been a major drag on China's economy this year. Economists say Beijing may need to launch more stimulus measures if the government is to meet its 2014 growth target of around 7.5 percent.
In other metals, LME aluminium touched its lowest since mid-July on Monday at $1,938 a tonne, before trading up 0.33 percent at $1,969.50 a tonne on Tuesday. Prices have found support at the 100-day moving average around $1,951, according to a private trader note. "Below that level the downside opens up to the key psychological level of $1,900 then the 200-day moving average at $1,863," the note said. Tin was up 0.43 percent at $16,746 a tonne, having earlier hit its lowest since July 2013 at $20,185 a tonne.
Comments
Comments are closed.