Copper dips

Copper fell as investors traded cautiously ahead of key data this week, weighing up signs of improved demand in the US, the world's largest economy, against lacklustre demand growth in top consumer China.

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Copper fell on Monday as investors traded cautiously ahead of key data this week, weighing up signs of improved demand in the US, the world's largest economy, against lacklustre demand growth in top consumer China.

Three-month copper on the London Metal Exchange dropped 0.16 percent to $8,366.25 a tonne by 11:09 SA time from $8,380 a tonne at the close on Friday, when the metal closed the week down 1.5 percent.

“The market is just waiting for the next trigger. There's probably more bullish (factors) than bearish but we're very much range trading,” said Standard Chartered analyst Dan Smith.

“China is a major obstacle, corporates and traders there are still pretty downbeat, there's a lot of metal sitting in bonded and exchange warehouses... (but) the US is outperforming on many measures.”

China consumes more than 40 percent of the world's copper. Data out overnight showed copper stocks in warehouses monitored by the Shanghai Futures Exchange fell 1.6 percent on the week.

But stocks remain near their highest in a decade, and Shanghai copper is trading at a premium to LME copper, indicating that the world's largest copper consumer is well stocked for now.

More positive for copper is that LME stocks continue to fall, with the latest data showing them down 1,175 tonnes at 255,175 tonnes, their lowest since November 2008, and equivalent to just 4.5 days of global demand.

“We are cautious on prices in the very short term, with the loss of Chinese apparent demand at about $8,400 per tonne unlikely to be totally offset by the improvement coming from ex-China,” said Macquarie in a note.

“That said the downside risk is not too severe, and the market looks strong for the balance of 2012. Leading indicators suggest apparent demand will continue to improve in the next 3-6 months.”

LITTLE SUPPORT

There was little support for copper in the wider markets, with European shares flat as investors were cautious ahead of key data this week and with the euro down versus the dollar, making dollar-priced metals costly for Europeans.

On the agenda is pending US home sales for February, due later on Monday, as well as an Italian bond auction and a meeting of euro zone finance ministers. Later this week the market will get US GDP and durable goods numbers.

Positive data could help copper, especially given that money managers of US copper futures increased their long positions or bets on price rises for a second week by March 20.

“There are always going to be some shakes up and down, (but) we're seeing equity markets improve, and people more comfortable taking exposure to risky assets like metals,” said Matt Fusarelli, analyst at Australia-based consultancy AME Group.

In other metals traded, lead fell 0.80 percent to $1,979 a tonne from $1,995, though falls were limited by indications that Chinese demand for the metal was picking up.

China's consumption of refined lead has risen this month, industry sources told Reuters last week, because of higher output of lead-acid batteries, manufacturers of which are the country's top users of the metal.

Soldering metal tin dipped 0.16 percent to $22,190 a tonne from $22,225, zinc, used in galvanizing fell 0.77 percent to $1,989.50 from $2,005, aluminium dropped 0.28 percent to $2,168 from $2,174, while stainless-steel ingredient nickel rose 0.14 percent to $18,200 from $18,175. - Reuters

Source: http://www.iol.co.za/copper-dips-1.1263931

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