SINGAPORE, May 24: London copper futures edged higher on Friday after falling the most in three weeks the session before on signs that growth had stalled in top consumer China.
But gains after Thursday’s more than 3-percent slide were limited, with most investors wary of buying back the metal after data showed China’s manufacturing activity shrank for the first time in seven months, dashing hopes of a recovery in demand.
Three-month copper on the London Metal Exchange had risen 0.4 percent to $7,331.50 a tonne by 0302 GMT. The metal is up just 0.2 percent for the week after falling to a one-week low of $7,215 on Thursday.
The preliminary HSBC purchasing managers’ index for May suggests China’s economic growth may remain under 8 percent in the second quarter, said Natalie Rampono, commodity strategist at Australia and New Zealand Banking Group. The country’s economy grew 7.7 percent in January-March, less than forecast.
‘There is a slowdown happening in China and it’s going to pressure copper prices for the rest of this month,’ said Rampono, who sees copper averaging $7,600 this year, down around 4 percent from 2012.
China accounts for about 40 percent of global copper consumption and its imports of refined copper declined more than a third in January-April, dragging down London copper prices by 12 percent from this year’s peak.
Despite the weakness in China’s manufacturing sector, Beijing is unlikely to launch any stimulus with the economy still on track to grow by 7.5-8 percent this year, in line with government targets, Commonwealth Bank of Australia said in a note.
‘Incremental easing – for instance, a more accommodative stance toward the property sector – is about all we expect might change,’ the bank said.
The most-traded September copper contract on the Shanghai Futures Exchange was up 0.3 percent at 52,780 yuan ($8,600) a tonne.
A continuing production outage at Grasberg in Indonesia, the world’s second-largest copper mine, should provide support to prices, having lifted London copper to a six-week peak of $7,533.75 on Wednesday.
Operations have been suspended at Grasberg since May 15 after a tunnel collapse killed 28 workers. A trade union official said on Thursday that all investigations into the incident at the Freeport McMoRan facility must be completed before workers return.
(AGENCIES)
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