SINGAPORE, July 2: London copper dropped today, giving up some of previous session’s sharp gains to a near two-week top, as a slowdown in China dented the outlook for demand from the world’s top consumer of the metal.
Activity among China’s large goods producers slowed to multi-month lows as global demand weakened, data showed yesterday, even as US manufacturing staged a modest rebound.
Three-month copper on the London Metal Exchange slipped by 0.6 percent to 6,937.75 dollars a tonne by 0759 IST, paring gains from the previous session when it climbed 3.4 percent to stage its biggest one-day rally in two months.
‘Last night’s move was purely short-covering — we’ve got a broader macro weakness eating away at copper,’ said analyst Tim Radford at Sydney-based advisory Rivkin.
‘I still see that there is further downside, although this Friday will be pretty crucial to near-term direction,’ he added.
Markets are awaiting U.S. Non-farm payrolls data for June, which is due on Friday, for signals about the health of the world’s largest economy and hints on when the Federal Reserve may begin to taper its huge bond-buying programme.
Copper prices in Shanghai, however, extended gains into a second straight day. The most-traded October copper contract on the Shanghai Futures Exchange climbed 1.96 percent to 50,000 yuan ($8,200) a tonne.
Copper drew some support from a flurry of demand for financing purposes in China after a short-term squeeze on liquidity in domestic markets intensified in June.
Some trading companies import metal before selling it onto the domestic market in return for cash, pushing up premiums for copper in bonded zone stores and underpinning prices.
Bonded copper premiums in China have soared over the past month to $190-$210 above LME copper prices, up from $140-$155 a month ago. (http://www.Shmet.Com/)
Chinese markets stabilised on Monday as investors spooked by last month’s cash crunch took heart from official reassurances that there is ample liquidity in the financial system.
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
(agencies)
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