Copper wilts on demand fears after soft Chinese data

LONDON: Copper prices retreated on Monday after feeble economic data from top metals consumer China kept a lid on demand expectations.

Three-month copper on the London Metal Exchange (LME) dropped 2.4% to $8,466 per metric ton in official open-outcry trading after rising by 3.6% last week.

The most-traded August copper contract on the Shanghai Futures Exchange eased 1% to 68,740 yuan per metric ton.

“Certainly we had weaker than expected GDP numbers and so far there’s not been huge amounts of stimulus announced,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International in London.

“We have not changed our view of expecting more tailored and targeted stimulus despite the weaker numbers.

Overall, the main aim is to maintain stability rather than have a big boost or double-digit growth like in previous years.“

Second-quarter data on Monday showed China’s economy grew only 0.8% from the previous quarter as demand weakened at home and abroad, with post-COVID momentum faltering rapidly and raising pressure on policymakers to deliver more stimulus.

Base metals slumped despite a weaker dollar, which hovered around 15-month lows after its biggest weekly drop of the year.

A softer dollar typically supports commodities priced in the US currency, making them cheaper to buyers holding other currencies.

Copper pulls back on doubts about rates, China stimulus

Also pressuring base metals was data showing China’s non-ferrous output last month continued to rise year on year, including aluminium. The increasing supplies and tepid demand raised expectations of growing inventories.

Excess supply in the spot market is pushing down the spot premium and weighing on futures prices, said analysts at Meierya Futures.

The Chinese copper spot market last week moved to a discount of 40 yuan a metric ton against the SHFE price, a five-month low.

Aluminium prices shrugged off a Bloomberg report saying that a unit of state-owned Aluminum Corp of China had terminated some aluminum contracts amid government-led investigation into deals in the market.

LME aluminium dropped 1.4% to $2,244 a metric ton, zinc shed 2.4% to $2,381, lead retreated 1.4% to $2,092.50 while nickel slid by 2.9% to $21,000 and tin fell 0.7% to $28,350.