Shanghai copper futures fell 1.3 percent on Monday, following declines in London in the previous session, and more weakness was expected after steep increases in inventories last week. The July copper contract, the most active on the Shanghai Futures Exchange, fell 830 yuan to 62,450 yuan ($8,938) a tonne.
Copper for delivery in three months on the London Metal Exchange rose $70 to $8,170, after falling 2.4 percent on Friday. "The fall in copper prices in Shanghai may attract some buying from Chinese users, but I do not expect anything large scale as there is a feeling prices will fall further," said Cai Luoyi at China International Futures, adding that prices could dip towards 62,000 yuan. Chinese imports of copper, including semi-finished products, rose 2.3 percent in April versus March to 246,119 tonnes.
Imports totalled 953,113 tonnes in the first four months of the year, down 11.8 percent on the previous year.
"Imports in previous years rose a lot in April from March as May traditionally is the beginning of the peak season," Yang Jun, senior analyst at China Futures said. "But we do not see this in the April figures and that is indicating that China's consumption has not been good." That view was also reflected by a rise in stocks of copper in Shanghai Futures Exchange warehouses, which gained 10 percent last week to 51,119 tonnes, while London Metal Exchange stocks also rose 10 percent, or 11,150 tonnes, on Friday to 121,275.
"I think this week I am probably on the side of the bears," ANZ's senior commodity analyst Mark Pervan said. "Copper is still a dollar-dominated story, but the market is worried about demand from China after the stock rises. But we might see mild support from a mine strike threat in Peru." Peruvian labour leaders suspended a nation-wide mining strike on Friday that was slated to start on Monday. "We've suspended it for 15 days," Luis Castillo, head of the country's leading federation of mining unions, said.
He added that union leaders will meet with Congressional representatives and President Alan Garcia's prime minister on Monday to try to forge a permanent settlement that would include Congress approving a bill favoured by the unions. The gap in prices between the London and Shanghai copper markets widened to 4,419 yuan from 4,326 yuan on Friday, including Chinese value-added tax.