Shanghai copper futures were steady on Thursday after London futures balked at setting new highs in the previous session when gains in the dollar overcame concerns about supplies. The July copper contract, the most active on the Shanghai Futures Exchange, fell 40 yuan to 64,790 yuan ($9,282) a tonne.
"Prices will range between 64,000 and 65,000 yuan. There is too much uncertainty in the global market and consumers are working very much hand to mouth," Bonnie Liu, analyst at Macquarie in Shanghai, said.
"There is very little excess stock around, but even a spike in prices won't mean panic buying. Consumers will only buy when prices come down." The gap between London copper and the Shanghai market narrowed to 5,274 yuan from 6,415 yuan on Tuesday, including Chinese value-added tax.
On Friday, the spread hit a record 6,549-yuan. "The arbitrage is starting to narrow from last week, but should remain relatively wide in the second quarter," Liu said. Copper for delivery in three months on the London Metal Exchange rose $35 to $8,590, having balked at last week's record high of $8,880 in the past couple of sessions.
"Its very much push-me pull-me in copper. Mine strikes in Chile are offset by China's softer apparent demand," ANZ's senior commodity analyst Mark Pervan said. "Right now, copper seems to be finding a short-term top and the dollar is bottoming out, but we think a recovery in the dollar has been pushed out to the fourth quarter.
That will give base metals a free ride." The euro had its biggest drop against the US dollar in three weeks on Wednesday as soft economic data and comment from European policy-makers indicated the weaker US currency is hurting euro zone economic growth.