London copper dipped to a one-month low on Monday after China’s factory activity faltered last month, raising concerns that successive easing measures in the world’s top metals user are failing to jump start the real economy.
China’s factory activity fell for an eighth straight month in October but at a slower pace as export orders flickered into life, a private survey showed on Monday, pointing to continued sluggishness in the world’s second-largest economy.
“Markets are certainly not factoring in any significant boost from new easing measures in the short term,’’ said analyst Daniel Hynes of ANZ in Sydney.
“While we're a bit negative on the macro side, I think we have gotten past the cyclical lows in copper.’’
Three-month copper on the London Metal Exchange had edged up 0.2 per cent to $5,122.50 a tonne by 0740 GMT, having earlier slipped to $5,086.50 a tonne, its weakest since October 2. Prices ended October barely changed and are inching back towards 6-year lows at $4,855 a tonne touched in late August.
Shanghai Futures Exchange copper fell 0.5 per cent to 38,590 yuan ($6,081) a tonne, having also struck its weakest since late September.
Reflecting some hopes from investors that China’s copper demand may improve into year-end, Comex copper speculators raised a net long position by 1,197 contracts to 8,186 in the week to Oct.27.
Looking ahead, US jobs data on Friday may hold the key to whether the Federal Reserve will raise interest rates for the first time since 2006 in December.
Aluminium prices in Shanghai and London were also under pressure.
China is likely to sell more aluminium on to world markets by offering its struggling smelters cheaper power prices to keep them operating, adding to growing trade tensions with rival producers in countries such as the United States and Russia.
“Aluminium production cuts or capacity shutdown are slow, mainly because of local government’s support. As well as providing subsidies, local governments are also involved in power tariff negotiations between power suppliers and smelters,’’ Argonaut Securities said in a note.
“We expect China’s aluminium production in 2015-2016 to remain strong (up 12 pct and 10 pct year-on-year) upon the commissioning of new capacity. We maintain our view that aluminium prices will decline 11 per cent and 9 per cent year-on-year to $1,681 and $1,538 a tonne in 2015 and 2016.’’
LME nickel rebounded nearly 1 per cent after a 3-per cent drop on Friday. Exchange stocks are falling, but traders say the material is going into financing deals.