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Shanghai copper slips for 4th day and eyes worst month since Oct
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Saturday, 30 Mar 2013

Reuters reported that Shanghai copper futures fell for a fourth straight day and were set to post their weakest month since October amid weaker demand from top consumer China and headwinds from troubled economies in the euro zone.

Shanghai copper is also on course for its worst quarter since April to June 2012 tracking its counterpart in London which closed out the Q1 with a near 5% loss. The London Metal Exchange is shut on Friday and Monday for Easter holidays, thinning trading activity in Shanghai. The most traded copper contract for July delivery on the Shanghai Futures Exchange dropped half a percent to CNY 55,260 per tonne by the midday break.

For the month, the contract is down 4.3% and has lost 4.9% for the quarter. Improving premiums for copper stocks at bonded warehouses in Shanghai suggest demand may pick up during the seasonally stronger second quarter. Premiums rose to USD 70 per tonne to USD 85 per tonne this week from around USD 55 per month ago.

Mr Leon Westgate analyst of Standard Bank said that when China does choose to restock and step back into the copper market, premia and prices will rally strongly and the market will likely tighten up much more quickly than many anticipate.

But Westgate believes that a significant pickup up in Chinese demand may only emerge towards the end of the Q3. This assumes of course that the oft cited wall of new copper production fails to arrive or is indeed siphoned off into a warehouse somewhere Westgate who sees copper supply outpacing demand by a modest 150,000 tonnes this year.

In Europe, copper premiums rose to as much as USD 100 per tonne over the LME cash price from as low as USD 50 in February amid increased competition from warehouses to mop up spare metal in the market.

Three month LME copper hit a one week low of USD 7,522 per tonne and ended March with a loss of 3.5% on worries over the fallout from a rescue deal for Cyprus and the lack of a government in Italy after inconclusive elections.

Source - Reuters


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