LONDON: Copper prices were steady on Wednesday despite weak manufacturing data from China as cautious investors pared back positions amid an uncertain outlook.
Three-month copper on the London Metal Exchange (LME) was up 0.2% at $8,124 per metric ton in official open-outcry trading, after recording a third consecutive monthly loss in October.
China’s factory activity unexpectedly contracted in October, two surveys showed on Tuesday and Wednesday, renewing concerns over the state of the country’s sprawling manufacturing sector.
The most-traded December copper contract on the Shanghai Futures Exchange ended day-time trade 0.2% lower at 67,280 yuan ($9,192.51) per metric ton.
“There’s probably a lot of head-scratching going on,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “There’s not any appetite right now to really challenge the downside, which is surprising considering the weak PMIs from China.”
A recent decline in LME and Shanghai copper stocks was helping to offset concern about the Chinese data, Hansen added. Investors appeared to be shunning the market, with open interest for LME copper falling to the lowest since September.
“That could indicate that we’re seeing both long and short positions being scaled back because the market is somewhat perplexed about the short-term direction,” Hansen said.
October saw less demand for refined copper in China compared with September, moving the market to a slight surplus, CITIC Futures said in a report. And the situation is likely to persist as consumption in November is expected to slide further, it added.
Also weighing on the market was a firmer dollar index , making greenback-priced commodities more expensive for buyers using other currencies.
Zinc spiked to a one-month peak after Nyrstar said it plans to temporarily close two US zinc mines. LME zinc climbed 1.9% to $2,476.50 per ton in official activity after touching $2,598.50, its highest since Oct. 2.
LME aluminium eased 0.5% to $2,241 per ton, nickel fell 0.4% to $18,050 and tin dropped 0.9% to $23,875, while lead climbed 0.9% to $2,104.