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London copper rose on Thursday after a slight pick-up in growth in China’s vast manufacturing sector, but simmering uncertainties over the global economy kept a cap on prices.
China’s vast factory sector grew a shade faster in October as firms saw more foreign and domestic orders, a private survey showed on Thursday, though the modest expansion likely won’t dispel concerns about the cooling Chinese economy.
“It would be a false hope for people to be expecting China policy makers to come to the rescue (of the copper market) yet again,’’ said analyst Matthew Fusarelli of AME Group in Sydney.
“We are expecting slower demand growth next year and we expect to see a lot higher smelter utilisation rate given the extra mine supply coming out," he said.
AME Group expects the global refined copper market to be balanced this year for the first time since 2009, swinging into a surplus of more than 500,000 tonnes next year when it sees prices averaging at $6,800.
LME copper
Three-month copper on the London Metal Exchange edged up 0.4 per cent to $6,655.25 a tonne by 0239 GMT. The metal hit a one-week top of $6,710 a tonne in the previous session before closing down 0.6 percent.
Volumes remained thin due to an industry week in London.
Inflation at 7-month low
Underscoring the pressures facing China's economy, growth in new orders at home and abroad slowed in October and producer prices fell, pushing factory inflation to a seven-month low.
The flash HSBC/Markit manufacturing purchasing managers' index (PMI) edged up to a three-month high of 50.4 from a final reading of 50.2 in September, and just a hair's breadth from the 50.3 reading forecast by analysts.
The most-traded January copper contract on the Shanghai Futures Exchange traded flat at 47,120 yuan ($7,700) a tonne.
China’s central bank is likely to hold its line against an interest rate cut even as growth slows to a quarter-century trough, as the politics of reforms influence the conduct of monetary policy, government sources involved in internal policy discussions say.
US consumer prices
Elsewhere, US consumer prices rose marginally in September, painting a weak inflation picture that should give the Federal Reserve ample room to keep interest rates low for a while.
Across other metals, Russian aluminium giant Rusal plans to keep output largely flat for three years because healthy stock levels are sufficient to make up for any output shortfalls, a top executive said on Wednesday.
Reflecting nearby supply stress in aluminium, cash prices have climbed against the benchmark to the narrowest since late August.
Many aluminium producers have cut loss-making capacity or shut down completely as they struggle with low London Metal Exchange prices, high energy costs and a flood of new capacity from China.
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