Reuters reported that London copper dropped to its lowest in almost a week after official manufacturing data from top metals consumer China fell short of expectations while fading hopes for monetary stimulus in the United States and Europe also dragged down prices.
But copper prices pared some of their early losses after data showed China's HSBC Purchasing Managers' Index rose to the highest level since February, easing concerns stoked by the official PMI figure that dropped to an 8 month low.
Beijing based metals analyst Ms Wang Ling of consultancy CRU said that "Copper is likely to stay range bound for the next few weeks. China's copper demand is not good and there's no sign of any recovery at the moment."
Ms Wang Ling said that 3 month copper on the London Metal Exchange traded down 0.2% at USD 7,548 per tonne by 0246 GMT after touching a low of USD 7,487.50 earlier in the session lowest since July 27th 2012. LME copper fell almost 2% in July. But the chance for copper prices to corrode further is limited with indications suggesting a low raw material pipeline for copper in China.
She said that on the raw materials side scrap availability is a bit tight. So there is a chance for copper to rise. There is still very limited room for copper to fall further. The most traded November copper contract on the Shanghai Futures Exchange fell 0.4% to CNY 54,850 per tonne.
Ms Wang Ling expects LME prices to trade in the USD 7,200 to USD 7,800 range over August and Shanghai copper prices in the CNY 53,000 per tonne to CNY 56,000 per tonne range.
Market participants are now looking towards China's August PMI figures which they believe will be a better indicator of the health of the world's second largest economy.
Standard Bank said that the crucial PMI manufacturing print is August. Since 2005, the August PMI has always been better than July. If it is not this year, it would signal a sharp downturn in China's growth. More trading cues are expected later in day from a slew of US and European manufacturing sector reports.
Source - Reuters
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