Rising stockpiles of metal at exchanges have fanned jitters about demand, compounding the impact of souring sentiment in broader markets. Photo: Bloomberg
Copper prices stabilised in London on Friday, helped by a lower dollar, but still staged their biggest weekly loss since January on concerns about when demand will grow again and ample supply in China.
Three-month copper on the London Metal Exchange closed unchanged at $US4650 a tonne, still near a six-week low hit in the previous session, when it slumped 2.8 per cent in the biggest daily loss since September.
LME copper fell 3.6 per cent this week, the biggest since the week of January 8, and has erased all its gains so far this year.
“Risk-off (sentiment) has weighed on cyclical commodity markets,” Julius Baer analyst Carsten Menke said. “Copper supplies are set to remain ample as producers are focusing on cutting costs rather than production.”
Rising stockpiles of metal at exchanges have fanned jitters about demand, compounding the impact of souring sentiment in broader markets.
Shanghai Futures Exchange copper edged off intraday lows of 35,890 yuan ($US5534) a tonne, but was still down 2.3 per cent.
SHFE exchange stocks hit a record just shy of 400,000 tonnes in mid March.
Fuelling concerns China will ramp up exports to global markets given a domestic oversupply, copper shipments into Singapore jumped 4800 tonnes, the latest LME data showed.
There are, however, signs that China’s economy is stabilising. The country’s exports likely returned to growth for the first time in nine months in March, while the pace of bank lending may have picked up.
“Prices could still fall quite a bit (in the short term) but over the next three months we would expect it to become clear that the stimulus we have seen in China is feeding through to stronger physical copper demand and that should eventually support prices,” Capital Economics senor commodities economist Caroline Bain said.
The second quarter is typically the strongest for demand in China, falling after the calendar and Lunar New Year holidays as factories manufacturing copper products such as cables and wire reach peak steam before the northern hemisphere’s summer break.
In wider markets, the dollar fell 0.3 per cent versus a basket of main currencies, making dollar-denominated commodities cheaper for foreign investors.
LME zinc was the biggest loser this week, falling 6 per cent, caught in the slipstream of copper as investors booked profits on metals. It closed up 0.2 per cent at $US1757 a tonne.
Nickel was the strongest LME performer, climbing 1.2 per cent to $US8545 a tonne at the close, while tin closed up 1.2 per cent at $US16,850.