LONDON: Copper prices held steady on Tuesday but came under pressure after data from top consumer China suggested weak growth and demand, while rising inventories and a firm dollar reinforced negative sentiment.
Benchmark copper on the London Metal Exchange (LME)was up 0.4% at $8,613 a tonne at 0951 GMT. Prices of the industrial metal used as a gauge of economic health have dropped 6% since April 14.
“The weaker tone during the second half of April was due mainly to concern about China’s growth prospects,” said Edward Meir, an analyst at Marex.
China’s copper imports in April fell 12.5% from a year earlier due to subdued global demand for China’s products and persistent weakness in the country’s property market.
China’s manufacturing activity unexpectedly dipped in April due to softer domestic demand, suggesting the sector is losing momentum.
“China’s manufacturing data has underwhelmed. The economic recovery is patchy. More policy support is likely if this weakness persists,” analysts at Citi said in a recent note.
Looking ahead, total social financing and loan data from China over the next few days will be closely scrutinised for clues to future growth and demand prospects.
Meanwhile, copper inventories in LME approved warehouses at 71,675 tonnes have climbed 40% since April 18.
Receding concerns about copper availability in the LME system have created a discount for the cash over the three-month contract.
The dollar edged up against major currencies as traders awaited clarity on U.S. debt ceiling talks and new inflation data for a clearer picture of the economic outlook and the Federal Reserve’s likely rate-hiking path.
A rising U.S. currency makes dollar-denominated metals more expensive for holders of other currencies, which could subdue demand.
In other metals, aluminium gained 0.5% to $2,329 a tonne, zinc slipped 0.8% to $2,666, lead added 0.5% to $2,129, tin advanced 0.1% to $26,100 and nickel shed 1.5% to $24,150.
Rising nickel supplies are behind the drop in nickel prices, which have dropped 25% since early January.