Shanghai copper futures were mostly flat in early trading on Thursday, as hopes of more support policies to invigorate the economy helped boost prices, even as domestic demand for the metal continued to sag. In a sign of weak local demand, spot premiums for copper in Shanghai bonded warehouse fell to just 80 yuan ($13) a tonne, compared with between $40-$50 in the start of the month.
However, prices were supported by reports that Beijing is moving to ease liquidity inside banks in a bid to help the economy. The most-traded March copper contract on the Shanghai Futures Exchange inched up 0.15 percent to 45,570 yuan a tonne by 0304 GMT. "Chinese copper consumption has been weak because of the economic slowdown, while the year-end credit tightness has dampened demand further," said Yan Duanhong, an analyst at Jinrui Futures.
"But talks that Beijing is going to ease liquidity is supporting prices." China Business News reported on Wednesday that the central bank is planning to include interbank lending by non-bank financial institutions as part of the calculated deposit base, which will expand the base for calculating the loan-to-deposit ratios. Quoting unnamed insider sources who attended a meeting with the central bank, the report said 24 major financial institutions were also told that even if interbank assets are including in the base, they may not need to set aside additional reserves, leaving more liquidity available for lending and investment.
LME copper fell on Wednesday as a strong dollar, weak oil prices and dimming demand prospects in top consumer China more than offset a brightening US economic picture. US jobless claims data beat forecasts, while data on Tuesday showed the economy grew at 5.0 percent in the third quarter, its quickest pace in 11 years and the strongest sign yet that growth has decisively shifted into higher gear.