By Veronica Brown and Melanie Burton
LONDON — Copper fell to its lowest in a month on Tuesday after disappointing U.S. employment data on Friday raised concerns about slowing growth, while a slight fall in China’s copper imports did little to shore up sentiment.
Losses were limited, however, by the view that China’s economic slowdown was not drastic, with off-take for copper seen kicking in towards the end of this quarter or the beginning of the next.
Investors also hung on to the possibility that China and the United States would roll out monetary loosening policies to boost growth.
Three-month copper on the London Metal Exchange CMCU3 fell 1.4 percent to $8,227 a tonne in official rings, after finishing last week flat ahead of Easter holiday closures. “It is clear that the Chinese (fabricators) were simply stocking up on copper, expecting a seasonal pick-up – perhaps towards the end of the second quarter or the second half of this year,” said Andrey Kryuchenkov, an analyst at VTB Capital in London, adding that there was probably an element of nerves while waiting for Chinese off-take to pick up.
He also noted that the market had pretty much stuck rigidly to a range of $8,200 to $8,700 since late January, with a unsustained push to the downside around the end of March.
“Don’t expect sustained gains here without Chinese off-take coming in,” he added.
China’s imports of copper edged down 4.6 percent to 462,182 tonnes in March from 484,569 tonnes in the previous month, data from the General Administration of Customs showed. [ID:nL3E8FA17L] As well as reflecting weaker real demand, the data showed that the use of copper for financing purposes was still prevalent, given that the figure slipped from February when refined copper imports stood at the third-highest ever level.
The numbers also came on the heels of data on Monday showing China’s annual inflation rate jumping more than expected in March to 3.6 percent as food prices remained volatile.[ID:nL3E8F613V] “In our view it would be premature to worry about a cooling of growth dynamism in China on the basis of this data, since copper imports were still more than 50 percent higher than the previous year’s figures,” Commerzbank analysts said in a note to clients.
“Nonetheless, we do anticipate that dynamism will continue to decrease over the next few months, which may prevent any significant rise in prices,” the bank added.
The U.S. nonfarm payrolls report released on Friday showed the addition of just 120,000 jobs in March, far below the expected increase of 203,000.
German government bond yields fell to their lowest since September, while European shares also fell as investors turned to safer assets. Gold rose slightly.
A Reuters poll on Monday showed most major Wall Street firms expect the anaemic growth in jobs and the struggling economic recovery to force the Fed to undertake another massive round of monetary stimulus.
Also helping to moderate investors’ pessimism was the view that China will avoid a hard landing. Customs data showed a $5.35 billion trade surplus in March as import growth eased back from a 13-month peak, while exports grew faster than expected.
In other base metals, aluminium CMAL3 traded down 0.8 percent at $2,090 a tonne in official rings, while tin CMSN3 was down 1 percent at $22,950. Zinc and nickel were not traded but were bid at $2,004 and $18,085 respectively, while lead changed hands at $2,038 a tonne.
Refined tin shipments from Indonesia, the world’s top exporter, fell 4.9 percent in March to 8,607.71 tonnes from 9,051.46 tonnes a year earlier, a trade ministry official said on Tuesday.
(C) Thomson Reuters 2011