LONDON: Copper prices dropped on Monday due to a lack of detail on China’s stimulus plans, deflationary pressures in the top consumer and a firm dollar, but higher Chinese imports of the industrial metal provided some support.
Benchmark copper on the London Metal Exchange (LME) was down 1.5% at $9,645 a metric ton at 1302 GMT.
New bank lending in China falling short of expectations and slowing growth in total social financing also raised demand concerns, while producer price deflation deepened, suggesting a need for China to roll out more stimulus measures quickly to revive flagging demand and economic activity.
However, China’s pledge on Saturday to “significantly increase” debt to revive growth did not include a dollar amount for the package, which included support for the property market.
“(China’s) weekend policy meeting failed to provide the stimulus and clarity markets had hoped for,” a metals trader said, adding that the Chinese military’s fresh war games near Taiwan created risk and uncertainty.
A stronger dollar also makes greenback-priced metals expensive for holders of other currencies, subduing demand.
Copper extends losses on firm dollar and China worries
China’s unwrought copper imports rose in September to 479,000 tons, up 15.4% from August, due to improving seasonal demand and a healthier outlook for demand.
Copper stocks in warehouses monitored by the Shanghai Futures Exchange at 156,485 tons, down more than 50% since June, indicate firmer demand for the metal used in power and construction.
Elsewhere, aluminium fell 1.3% to $2,597 a ton. It has been supported by higher prices of alumina used to make the metal for transport, packaging and construction industries.
Alumina prices rose last week due to supply disruptions in Guinea, a major exporter of the material.
Overall, the mood turned negative after export growth, the one bright spot for the Chinese economy, decelerated in September, suggesting manufacturers are slashing prices to move inventory ahead of tariffs from several trade partners.
In other metals, zinc tumbled 3.1% to $3,055 a ton, lead retreated 2.3% to $2,049, tin ceded 2.3% to $32,460 and nickel shed 1.5% to $17,590 a ton.
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