London copper fell on Friday to its weakest since March and was on track for a fifth weekly drop, with a seasonal ebb in Chinese demand expected to keep eroding prices.
Dominic Schnider, an analyst at UBS Asset Management in Hong Kong, said it was a concern that a recovery in China’s manufacturing sector was not stronger given the scale of fiscal support by Beijing.
“What has helped copper has been a little bit of dollar weakness, but guess what? That’s not going to last. We still think there is an improvement in the second half, but that’s contingent on more China stimulus,’’ he said.
Three-month copper on the London Metal Exchange fell half a per cent to $5,705, its lowest since March 19. Prices were set for a weekly decline of more than 3 per cent.
The most-traded copper contract on the Shanghai Futures Exchange eased 0.2 per cent to 41,820 yuan ($6,734) a tonne.
Traders said there had been light consumer buying from China as copper prices fell, but physical premiums for the metal in Shanghai’s bonded zone slipped another $5 this week to $60, illustrating tepid demand as factories wind down over summer.
“The big story is the total lack of demand from China in the second quarter,’’ a Singapore-based copper trader said.
“Some of the smelters went on maintenance in the second quarter, but now they are starting up again, pumping out more metal that we don’t need and raising stockpiles higher ... copper is going to have a tough time over the next few months.’’
In other metals, LME tin slipped 0.5 per cent, following a more than 4-per cent jump overnight. Gains had been fuelled by technical buying, after prices broke through resistance at $15,000 a tonne, a trader said.
LME aluminium, zinc nickel and lead were down around half a per cent.
LME aluminium struck a 16 month trough at $1,687.50, which, given the collapse in global premiums is expected to ramp up pressure on producers. US aluminium producer Noranda Aluminum launched a strategic review of its business this week.
ShFE nickel dropped 1.8 per cent and was set for a 5 per cent weekly fall amid speculation the bourse will accept global brands for delivery and amid weak stainless steel demand.
There will be a solution to the Greek debt crisis that will allow the country to return to growth while staying in the euro zone, Prime Minister Alexis Tsipras said on Friday, as the country moved closer to the brink of default.