SINGAPORE, May 20: London copper slipped on Monday after a jump in US consumer confidence raised prospects the country could begin trimming its bond-buying program, eroding metals’ allure for investors, against a backdrop of slowing growth in top consumer China.
Three-month copper on the London Metal Exchange shed 0.36 percent to $7,282.50 a tonne by 0219 GMT, reversing the previous session’s gains.
Copper snapped a three-week winning streak to end last week down by around 1 percent and has logged losses of more than 8 percent year-to-date.
The most-traded September copper contract on the Shanghai Futures Exchange eased by 0.15 percent to 52,600 yuan ($8,600) a tonne.
‘Copper prices are stuck, range-trading from around $7,100 to $7,300. There is speculation the Fed will end bond-buying soon, but it’s not priced in yet,’ said analyst Bonnie Liu with Macquarie in Singapore.
Americans felt better about their economic and financial prospects in early May as consumer sentiment rose to the highest level in nearly six years, an encouraging sign after other recent data had suggested broader US growth is cooling.
Anticipation of a reduction in bond-buying has boosted the dollar, with the dollar index, which measures the dollar’s value against a basket of currencies, hitting 84.371 on Friday, its strongest level since July 2010. It stood at 84.204 on Monday.
A stronger dollar makes commodities, priced in the US unit, more expensive for holders of other currencies.
Metals demand in China, the world’s top metals consumer, tends to peak in the second quarter. Demand has improved this year from last year but growth is slower than the past decade’s trend.
‘Demand in China is alright – auto is doing well and the cable and wire sectors are okay. Visibility over order times has shortened since last year, so as to when seasonal strength ends, we will have to wait to see how orders go in June,’ said Liu.
Looking ahead this week, more evidence of improving activity is needed for commodities to gain some ground, Credit Suisse said in a note.
Federal Reserve Chairman Ben Bernanke is expected to emphasise the central bank’s ability to add to and take away monetary support in his speech to Congress on Wednesday while flash manufacturing indicators are due from China and the eurozone on Thursday.
(agencies)
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