Shanghai copper fell more than 1 percent on Monday weighed down by a stronger dollar and as investors continued to worry about Greece's debt crisis. The US dollar was firmer in Asia on Monday as concerns over Greece weighed on the euro ahead of a euro zone summit, while the aftershock of India's surprise rate hike pressured currencies leveraged to global growth.
"Metals are stuck in range trade. There isn't enough upward momentum, or downward pressure. China's demand is not as strong as expected, as reflected in increasing stockpiles in Shanghai. India's rate hike sent shockwaves to the market," said a Shanghai-based trader. "Shanghai copper is likely to trade in the narrow range of 1,000 yuan between 59,000 yuan and 60,000 yuan a tonne."
Shanghai's benchmark third-month copper futures contract fell 1.2 percent end at 59,530 yuan a tonne, reversing the gain of 1.3 percent last week. Three-month copper on the London Metal Exchange fell $10 to $7,425 a tonne. "If LME copper falls below $7,000, there will be buying interest," said the Shanghai-based trader.
Shanghai's copper inventories rose 9 percent from a week earlier to 169,101 tonnes last Friday, their highest level since mid-September 2002. "Demand is all right. But there's increasing pressure from the supply side. The high stocks will hinder further price rises," said Li Rong, an analyst at Great Wall Futures.
China's refined copper imports rose 12 percent in February from the previous month to 220,530 tonnes, on attractive margins for spot arrivals. But imports are expected to falter in March as price ratios have turned unfavourable. Besides the euro zone summit scheduled on March 24-25, investors are also closely watching a slew of data out of the US, including home sales and durable goods orders for February, to assess the strength of the global economic recovery.
"The euro zone summit should be able to provide a solution to Greece's debt problem, and the market may see a clear signal and break out of the range," said Fang Junfeng, an analyst at Shanghai CIFCO Futures. Shanghai zinc fell to a one-week low of 18,480 yuan, before ending at 18,560 yuan, down 2.1 percent. LME zinc was down $17 to $2,278 a tonne.