Shanghai copper slid 0.3 percent to 43,690 yuan ($7,049) a tonne on Tuesday as bleak global factory growth data indicated a muddy outlook for metal consumption over what is typically the stronger quarter of the year for seasonal demand. Manufacturing activity showed few signs of picking up across Europe, Asia or the Americas last month as demand stayed stubbornly weak, highlighting the need for central banks to continue supporting economic growth.
"It has been a softish start to the year so far and the first half is typically a bit stronger than the second," said analyst Dan Morgan of UBS in Sydney. But some short-term demand signals have started to turn positive, he added. "Inventories have stopped lifting, cancelled warrants are at a healthy level, and credit policy in China has loosened... supply disruptions year to date have (also) been a tad ahead of what we have factored in."
But given the absence of major supply disruptions in May, Barclays sees a surplus of 48,000 tonnes for 2015. "We maintain our current view on copper and expect the market to deliver a modest surplus this year, with prices averaging $6,313 a tonne for the year, and $6,300 for Q2 15."
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