Mumbai, 27 Jul (Commoditiescontrol): Copper prices recorded third consecutive weekly decline on Friday, driven by worries that a recent uptick in physical buying from China, the top consumer, might be short-lived due to the sluggish economy and lack of significant stimulus measures.
Three-month copper on the London Metal Exchange (LME) edged up 0.2% to $9,142 per metric ton by 1028 GMT, but it was still down 1.8% for the week. The metal has seen a sharp downturn, hitting its lowest levels in nearly four months, amid mounting demand concerns from China. Chinese copper consumers returned to the market after two tepid months, attracted by prices that had dropped 17.8% from their record high in May.
Data showed copper inventories in warehouses monitored by the Shanghai Futures Exchange (ShFE) declined to a two-month low of 301,203 tons. However, the Chinese government's reluctance to implement significant stimulus to address the economic slowdown in the manufacturing sector has weighed on market sentiment. Instead, the government reiterated its focus on steering the economy towards advanced technologies and new energies.
The lack of economic support led to a sell-off in assets and base metals contracts, prompting the People's Bank of China (PBoC) to introduce extraordinary rate cuts. This followed concerning factory activity data, with the NBS manufacturing PMI contracting for the second month in June. As a result, Chinese smelters and factories have increasingly relied on foreign demand, evidenced by a 187% annual surge in copper exports during this period. Furthermore, threats of trade barriers from the US and Europe have added to the bearish momentum.
Investors are also closely watching the U.S. Federal Reserve's monetary policy meeting on July 31 for indications of interest rate cuts expected to begin in September. A rate cut could weaken the U.S. dollar, making dollar-priced metals cheaper for holders of other currencies.
In other metals, LME lead was up 1% at $2,048.50 per ton, zinc fell 0.9% to $2,656, tin rose 0.5% to $29,550, nickel gained 0.3% to $15,815, and aluminum increased 0.5% to $2,282.
(By Commoditiescontrol Bureau: 09820130172)
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