LONDON: Copper prices edged above seven-week lows on Wednesday as a weaker dollar offered support while zinc slumped to the weakest in two months after a surge in inventories.
Three-month copper on the London Metal Exchange was up 0.1% at $8,207 per metric ton by 1030 GMT, bouncing after re-testing the seven-week low of $8,148.50 seen in the previous session.
LME copper has shed nearly 8% since hitting the strongest in over a month at the start of August as investors have been discouraged about the lack of strong stimulus in top metals consumer China.
“The biggest weight on the market right now is the huge disappointment in Chinese data,” said Nitesh Shah, commodity strategist at WisdomTree.
“With today’s home sales data looking weak, there are increasing signs that commodity intensive sectors are vulnerable.”
Copper hits 6-week low, other metals fall after weak China data
Data on Wednesday showed China’s new home prices fell for the first time this year in July, the latest in a string of downbeat data that points to a rapid loss in broader economic momentum.
“We are making up to 200 yuan losses per ton we sell currently. And if the property woes continue and are exacerbated, we might see demand fall lower in the following months,” said a copper rod producer in China.
The most-traded September copper contract on the Shanghai Futures Exchange ended day-time trade 1.1% lower to 67,550 yuan ($9,258.88) per ton, a five-week low.
Counteracting the weak data, however, was a weaker dollar index, making commodities priced in the U.S. currency less expensive for buyers using other currencies.
Zinc was the biggest loser on the LME, dropping 1.1% to $2,288 a ton after hitting a two-month low of $2,265.
Prices slumped after data showed zinc inventories in LME-registered warehouses have surged by 54% over two days to the highest level in 17 months, highlighting a market surplus amid weak demand.
In other metals, LME aluminium dipped 0.1% to $2,141 a ton, lead eased 0.5% to $2,111, tin shed 0.9% to $24,960 while nickel gained 1.4% to $20,065.