LONDON: Copper prices steadied on Wednesday after touching a three-week low, but the modest gains were capped by worries about the prospect of weaker global economic growth dampening demand for industrial metals.
Three-month copper on the London Metal Exchange was up 0.3% at $8,979 per metric ton by 1415 GMT after touching $8,890, its weakest level since Aug. 12. Buying by industrial users helped bolster prices on the LME, but US Comex copper futures slipped 0.7% to $4.02 a lb. Metals joined sliding oil and equity markets in the wake of weak US factory data on Wednesday and recent lacklustre data from top metals consumer China.
“The mood in the market is most certainly challenged,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen. “Risk sentiment has taken a setback with the renewed weakness in the stock market, but the economic growth outlook is also not looking great, and that’s impacting the demand outlook for metals.” Concerns about China’s economy deepened on Wednesday when data showed growth in its services sector activity slowed in August after previous downbeat numbers from the manufacturing and property sectors.
The most-traded October copper contract on the Shanghai Futures Exchange finished daytime trade 2.4% lower at 71,700 yuan ($10,081) a ton, its lowest price since Aug. 13.
Guangzhou Futures analysts eyed 70,000 yuan per ton as a support level for Shanghai copper.
Widely expected rate cuts by the Federal Reserve in September and the rest of this year could stabilise the markets, analysts said. “The real kicker right now is whether this weakness is going to be prolonged or whether it’s going to be arrested by upcoming rate cuts,” Hansen said.
LME aluminium eased 0.6% to $2,393.50 a ton, nickel fell 1.4% to $16,225, zinc slid 1.6% to $2,800.50, lead lost 1.3% to $2,022.50 and tin dropped 1% to $30,435.
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