Copper steadies as China yuan halts slide, demand woes persist

Copper steadied on Friday as investor concerns over weak summer demand were offset by relief that China's central bank had stopped guiding the yuan lower, returning some buying power to Chinese importers of the metal. The People's Bank of China set the yuan midpoint slightly stronger, undoing some of the damage done to global markets earlier in the week when it devalued the currency and then allowed it to weaken further.
A weaker yuan makes imports for China, the world's top metals consumer, more expensive. Three-month copper on the London Metal Exchange traded down 0.4 percent in official midday rings at $5,165 a tonne. The metal saw volatile trade this week, hitting a six-year trough of $5,062 a tonne in the wake of China's currency moves.
"The extreme lows we saw on Wednesday were in part a bit of an aberration. If it's the case that there's not going to be much further (yuan) depreciation then I think metals could stabilise," said BNP Paribas analyst Stephen Briggs. He added, however: "It's hard to be optimistic on copper, one has to conclude that demand is really weak because in the last few weeks there's been an unusually high number of supply disruptions and it's done nothing for copper prices."
US miner Freeport-McMoRan said on Friday it expected the resumption of copper concentrate exports from Indonesia to be delayed further while buyers adjusted to rules that stopped shipments from its Grasberg complex last month. Also, Europe's No 2 copper producer, Poland's KGHM, said on Thursday it may postpone or suspend some investment projects if prices of the metal remain at low levels longer term. Copper prices were also hurt by a slide in US crude prices to 6-1/2 year lows. Sliding oil prices can deter investors who put money in commodity basket funds that include copper.
Elsewhere, tin prices dipped rose 3.3 percent to $15,500 a tonne, the strongest gains in the LME complex. Tough new rules by top tin exporter Indonesia have brought the sector there to a standstill, which along with an expected fall-off in ore supply from Myanmar and less refined output in China, is tightening the market. Aluminium traded down 0.1 percent in rings at $1,573 a tonne, zinc was last bid down 0.7 percent in rings at $1,843, lead traded down 0.3 percent in rings at $1,747 and nickel was last bid down 0.9 percent at $10,550.