LONDON: Copper dipped on Friday as investors questioned whether attempts by top metals consumer China to boost its economy would be effective, though a softer dollar helped it hold on track for its biggest weekly gain in more than two months.
Three-month copper on the London Metal Exchange (LME) fell 0.3% to $8,543 per metric ton as at 1700 GMT. On a weekly basis it has risen 2.4%, and is on course for its strongest week since mid November.
China’s central bank this week announced a deep cut in the amount of cash banks must hold as reserves, and a Bloomberg report said Chinese authorities were considering mobilising about 2 trillion yuan to stabilise a slumping stock market.
A struggling property market and low consumer confidence might not be bolstered by the measures announced this week, said Julius Baer commodity analyst Carsten Menke.
“There is bearish sentiment across metals, with a challenging short-term outlook, as China is unlikely to find a secret to U-turn the economy,” Menke said.
Falls however were limited by weakness in the US dollar, making metals cheaper for buyers using other currencies. LME nickel dropped 0.4% to $16,660 a ton, lead rose by 0.3% to $2,158.5,and zinc dropped 0.2% to $2,575. Tin edged up 0.1% to $26,670.
Aluminium was up 1.4% at $2,271 a ton following the shutdown of a US primary smelter. Global supplies of aluminium and nickel are still sufficient, while there will be shortfalls in output from copper mines, Menke said.
China’s top copper smelters, accounting for more than 75% of the country’s output, on Friday proposed to cut production because a lack of mined copper supply has led to a sharp decline in income and hurt margins.
“There is more than enough copper smelting capacity worldwide. Even if Chinese smelters are not buying copper concentrates, the rest of the world will,” Menke added.
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