LONDON: Copper prices were steady on Tuesday as top metals consumer China approved more stimulus, offsetting a stronger dollar and worries that other major economies may be heading to recession.
Three-month copper on the London Metal Exchange was little changed at $7,970 per metric ton in official open-outcry trading after probing an 11-month low in the previous session.
China’s top parliament body approved a bill that will allow local governments to front load part of their 2024 bond quotas and issuance of new sovereign debt, helping to shore up economic recovery.
“In China, house prices are still weak, which is rather negative as the government has already been injecting stimulus. On the other hand, the macro stuff has been pretty robust and metals demand is good as well,” said Dan Smith, head of research at Amalgamated Metal Trading (AMT).
Market confidence was also boosted after China’s state fund Central Huijin Investment bought exchange-traded funds, Jinrui Futures said in a report.
Tight copper scrap supply, coupled with falling refined copper prices, has improved consumption of the metal, but not significantly, the report said, noting that a bearish macroeconomic outlook will continue to pressure copper prices.
Data on Tuesday showed Euro zone business activity took a surprise turn for the worse this month, suggesting the bloc may slip into recession.
That data sent the euro sliding and boosted the dollar index, making commodities priced in the U.S. currency more expensive for buyers using other currencies.
Copper has a bearish outlook over six to 12 months and the LME price is likely to head towards $7,000 a ton, AMT’s Smith added.
“I think copper will steadily break lower in next few weeks and months. It’s pretty clear the fundamental side of things is turning weaker and I’m not sure demand is going to be quite strong enough to fight that tide.”
LME aluminium dipped 0.2% in official activity to $2,171.50 a metric ton and lead eased 0.1% to $2,100 while zinc added 0.2% to $2,425 and tin rose 0.3% to $24,975.
Nickel was 0.7% lower at $18,050 after touching a two-year low of $17,930.
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