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London copper eyes first week of gains in 6 on China prospects
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Saturday, 17 Nov 2012

Reuters reported that London copper climbed and was set to log its first week of gains in six as signs top consumer China's slide in economic growth has bottomed out helped to firm sentiment towards base metals.

October figures showing China's economy was finally on the mend after 7 quarters of slowing growth have turned some banks more optimistic over the red metal's demand outlook. But bulging inventories in China, a modest pick up at best in demand next year and improving supply have kept hopes for a sizzling rally in check.

Mr Nick Trevethan senior commodity strategist at ANZ in Singapore said that "The lows around USD 7,500 that we've seen probably represent the extent of the downside. You still have these worries about the US in particular that might 4 prices lower, but from a fundamental perspective at least, improving China data should support prices going forward."

ANZ expects prices to climb above USD 8,000 per tonne by year end. Three month copper on the London Metal Exchange had climbed 0.27 percent to USD 7,660 per tonne by 0318 GMT from the previous session when it finished little changed.

Prices had fallen every week since September 30th 2012 as gains on monetary easing steps in Europe and the United States petered out, chopping a year to date climb of around 10% at one point down to less than 1%.

The most traded February copper contract on the Shanghai Futures Exchange inched up 0.20% to CNY 55,950 per tonne. China announced at the weekend that its economy is turning the corner and is likely to meet its growth target for the year. Industrial output, exports and retail sales all beat expectations in October.

The country's state stockpiler this week also bought aluminium and zinc from domestic smelters in a bid to aid local industry in what analysts say will have little impact on a market dogged by oversupply but may boost sentiment.

In broader markets on Friday, a recovering euro against the dollar offered some support to metals, even after news this week the euro zone entered second recession since 2009 in the Q3. A weaker dollar makes commodities priced in the greenback cheaper for holders of other currencies.

Asian shares steadied on Friday after falling nearly 2% this week amid concerns about the looming US fiscal cliff. Democrats and Republicans dug in on their long held opposing positions as President Barack Obama and congressional leaders prepared for budget and tax talks on Friday aimed at preventing the US economy from falling back into recession next year.

RBC Capital said that all in all, the market continues to seek direction/inspiration and we think it will take some form of fresh stimulus to bring a bid back to the market otherwise we are likely to trade sideways in the short term.

Source - Reuters


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