Copper fell on Wednesday, pressured by concerns about economic growth in China and Europe, although falls were capped by some short-covering after dipping to five-month lows last week. Three-month copper on the London Metal Exchange (LME), untraded at the close, was bid at $6,635, down 0.5 percent. Prices fell to a five-month low of $6,600 a tonne on October 2.
The International Monetary Fund on Tuesday cut its global growth forecasts for a third time this year while German industrial output in August posted its biggest fall since the financial crisis. -- LME wins appeal against ruling that had halted reforms Underpinning copper, however, China's main share index hit a 20-month high in intraday trade on Wednesday, helped by strength in property developers after the central bank rolled out policies to boost the struggling sector.
Chinese buyers returned to the market on Wednesday after a week-long break, but several factors continue to weigh on copper prices, including a strong dollar, expectations of rising supply and what is still an overall growth slowdown in top consumer China and in Europe.
Growth in China's services sector weakened slightly in September as new business cooled, a private survey showed on Wednesday, reinforcing signs of a slowdown that could prompt more stimulus measures. "Base metals are generally stuck in a downward trend," said William Adams, head of research at Fast Markets. "Copper supply is picking up. Higher treatment and refining charges should encourage smelters to increase utilisation rates, and if that happens at the same time as a slowdown in China and Europe, its going to be a headwind."
European copper smelters are looking to raise raw material processing fees by 20 percent next year, as spot smelting charges race to 10-month highs, trading sources said. On the demand side, Spain posted its weakest industrial output growth for almost a year, while a German newspaper reported that a group of leading economic institutes was set to sharply cut its growth forecasts for Germany.
The dollar edged higher against the euro as traders waited for minutes from the US Federal Reserve's latest policy meeting for signs that the United States is moving closer to raising interest rate. A strong US currency makes dollar-priced metals costlier for European and other non-US investors. Workers at Freeport-McMoRan Inc's giant Indonesian copper mine are seeking face-to-face talks with local management after a fatal accident and may plan a further mine blockade or strike action, a union official said.
"We continue to expect the copper price to fall further in the fourth quarter, but this forecast is premised on strong supply growth rather than a sharp drop in demand. Indeed, if supply disappoints, the recent falls in price could be reversed sooner rather than later," Capital Economics said in a note. The LME won its appeal against a court ruling that had halted sweeping reform, aimed at easing huge backlogs to withdraw metal from its global warehousing network.
Aluminium ended 0.8 percent lower at $1,940, zinc ended flat at $2,320, lead fell 0.6 percent to $2,080, tin was down 0.9 percent at $20,150 and nickel was down 2.5 percent at $16,535. Nickel has shed around 30 percent since touching a 27-month peak of $21,625 a tonne in May after a deficit failed to appear despite a ban on ore shipments from top exporter Indonesia.
Comments
Comments are closed.