Copper hits month low on signs of slowing China growth
Bareksa • 27 Jan 2014
Fire and smoke spew out from multiple spots at Nippon Steel & Sumitomo Metal Corp's Nagoya steel plant (REUTERS/Kyodo)
LME nickel on track to end week little changed despite Indonesia ban
Reuters - Copper fell to its lowest in a month on Friday and struck its biggest weekly fall since mid-November as slowing growth in China's factories fuelled worries about demand in the world's top metals consumer.
Three-month copper on the London Metal Exchange ended at $7,180 a tonne, its lowest level in a month and down from a close of $7,292 on Thursday. The metal is down 2 percent for the week.
Weaker domestic and overseas demand in January hurt Chinese factory output and drove the Flash Markit/HSBC purchasing managers' index to 49.6 in its first contraction in six months. A reading above 50 indicates growth.
On Friday meanwhile, a global flight from emerging market assets gathered pace as investors worried about the impact of slower growth in China, U.S. monetary policy and political problems in Turkey, Argentina and Ukraine.
"There is nothing positive for copper at the moment," said Naeem Aslam, chief market analyst at Ava Trade in Dublin. "The HSBC Flash manufacturing PMI data rattled many nerves in the market."
He also said there are expectations that the U.S. Federal Reserve will further taper its stimulus package next week, which would put further pressure on copper.
The Fed's bond-buying programme has increased liquidity in markets, which in turn has helped support commodities prices. Fed policymakers will meet next Tuesday and Wednesday.
Limiting losses in copper however, was news that several Chilean ports were on strike, curbing metal, fruit and other shipments from the country that accounts for about a third of the world's copper supply.
Still, nearby tightness in the physical market continues to ease, shown by LME forward spreads, as buying winds down ahead of the Chinese Lunar New Year, which begins next Friday.
LME cash copper traded $24 above the benchmark contract, down from a high of $64.50 on Tuesday.
"Outlook wise, we think that the steady drip-feed of less-than-stellar Chinese macro data will likely keep the pressure on prices for a little while longer, although the selling may abate at about the time that the Chinese New Year holidays commence," said INTL FC Stone in a note.
In other metals traded, LME nickel ended the week down 1.5 percent, closing $14,485 a tonne after having gained more than 6 percent last week before a ban on exports of ore from Indonesia came into force.
The global nickel market surplus more than doubled to 180,000 tonnes in the first 11 months of 2013 compared with the same period a year earlier, a monthly bulletin from the Lisbon-based International Nickel Study Group (INSG) showed.
Lead ended up 0.65 pct to $2,167 a tonne, zinc ended down 1.3 percent at $2,020 a tonne, aluminium closed down just $1 at $1,762 a tonne, while tin was last bid at $22,000 a tonne, unchanged at the close.
PRICES
Three month LME copper
Most active ShFE copper
Three month LME aluminium
Most active ShFE aluminium
Three month LME zinc
Most active ShFE zinc
Three month LME lead
Most active ShFE lead
Three month LME nickel
Three month LME tin