Copper dips on China woes, US data caps losses - The Economic Times
SINGAPORE: London copper edged lower on Tuesday as slow demand from top consumer China spurred caution among investors, although more signs of a mending U.S. economy are helping to limit losses.
Copper has gained nearly 12 percent this year, but has been struggling to trade higher, given slack Chinese demand since after the Lunar New Year break in January.
"I believe Chinese demand is recovering but at a very, very slow pace," said Judy Zhu, commodity analyst at Standard Chartered in Shanghai, citing a drop, though modest, in Shanghai copper stockpiles last week.
"Chinese demand is going to improve in the weeks ahead on seasonal factors but the recovery should be slow because some copper consumers, like home appliance makers, are dealing with huge stockpiles due to weak order books from both domestic and overseas markets."
Copper inventories in Shanghai warehouses dropped by around 1,000 tonnes to 216,086 tonnes last week from a near 10-year high above 217,000 tonnes the previous week.
With China consuming around 40 percent of global copper, market players say unless the country's demand picks up strongly, copper's rally this year could soon lose steam.
As such, China's official purchasing managers' index, due out on Thursday, will be keenly watched. A Reuters poll suggests the number, which measures activities in China's manufacturing sector, edged up to 50.7 in February from 50.5 in January.
HSBC flash PMI -- a sister survey and also the earliest indicator of China's industrial activity -- hit a fourth-month high of 49.7 in February, but new export orders shrank the most in eight months as global demand weakens.
Continuously positive economic data out of the United States is helping shield copper from a sell-off.
There was further evidence of a recovering U.S. housing market on Tuesday, with data showing that contracts to purchase previously owned U.S. homes neared a two-year high in January. That data, along with oil's fall, helped the S&P 500 close at its highest since June 2008.
"With many industrial metals still being undervalued...we think the sector is likely to see further gains as long as economic data continues to signal stabilization of growth," Credit Suisse said in a note.
With increased liquidity across the world as central banks ease credit conditions to boost growth, StanChart's Zhu said this should lift copper to an average $9,000 a tonne during the third quarter.
Fromthree-month copper on the London Metal Exchange slipped 0.4 percent to $8,505.25 a tonne by 0317 GMT, and is now 3 percent off a five-month high of $8,765 reached on Feb. 9.
-- a rise 5.5% or so...
SINGAPORE: London copper edged lower on Tuesday as slow demand from top consumer China spurred caution among investors, although more signs of a mending U.S. economy are helping to limit losses.
Copper has gained nearly 12 percent this year, but has been struggling to trade higher, given slack Chinese demand since after the Lunar New Year break in January.
"I believe Chinese demand is recovering but at a very, very slow pace," said Judy Zhu, commodity analyst at Standard Chartered in Shanghai, citing a drop, though modest, in Shanghai copper stockpiles last week.
"Chinese demand is going to improve in the weeks ahead on seasonal factors but the recovery should be slow because some copper consumers, like home appliance makers, are dealing with huge stockpiles due to weak order books from both domestic and overseas markets."
Copper inventories in Shanghai warehouses dropped by around 1,000 tonnes to 216,086 tonnes last week from a near 10-year high above 217,000 tonnes the previous week.
With China consuming around 40 percent of global copper, market players say unless the country's demand picks up strongly, copper's rally this year could soon lose steam.
As such, China's official purchasing managers' index, due out on Thursday, will be keenly watched. A Reuters poll suggests the number, which measures activities in China's manufacturing sector, edged up to 50.7 in February from 50.5 in January.
HSBC flash PMI -- a sister survey and also the earliest indicator of China's industrial activity -- hit a fourth-month high of 49.7 in February, but new export orders shrank the most in eight months as global demand weakens.
Continuously positive economic data out of the United States is helping shield copper from a sell-off.
There was further evidence of a recovering U.S. housing market on Tuesday, with data showing that contracts to purchase previously owned U.S. homes neared a two-year high in January. That data, along with oil's fall, helped the S&P 500 close at its highest since June 2008.
"With many industrial metals still being undervalued...we think the sector is likely to see further gains as long as economic data continues to signal stabilization of growth," Credit Suisse said in a note.
With increased liquidity across the world as central banks ease credit conditions to boost growth, StanChart's Zhu said this should lift copper to an average $9,000 a tonne during the third quarter.
Fromthree-month copper on the London Metal Exchange slipped 0.4 percent to $8,505.25 a tonne by 0317 GMT, and is now 3 percent off a five-month high of $8,765 reached on Feb. 9.
-- a rise 5.5% or so...
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