SINGAPORE: Copper slipped on Wednesday with investor focus shifting to upcoming US manufacturing data for fresh insight into the health of the world's top economy, while hopes for further monetary policy easing continued to cushion prices.
London copper rallied about 2 percent on Monday and then rose to a one-week high of $8,585 on Tuesday on hopes of further easing from the United States, but gains have been tempered by worries about slowing growth in China, the world's leading consumer of metals.
Three-month copper on the London Metal Exchange dropped 0.6 percent to $8,485 a tonne by 0231 GMT. The most-traded June copper contract on the Shanghai Futures Exchange fell half a percent to 60,410 yuan ($9,600) a tonne.
"US macro numbers seem to be topping out a bit. We seem to have lost some of this really good momentum we had earlier in the year - the slowdown in other countries and energy prices is taking its toll," metals analyst Edward Meir at INTL FCStone said.
"If the next shoe is to drop, it will come from the macro numbers in the States really weakening and then the markets will take a hit. Chinese demand is not great - we're hearing that from many sources."
Prices have gained more than 11 percent this year, though they have been stuck in a $8,100-$8,800 range since late January. Markets are watching for US February durable goods figures later in the session.
US durable goods for February are due at 1230 GMT and seen growing by 3.0 percent.
Wider markets were also marking time ahead of the figures. Asian shares drifted lower on Wednesday as investors waited for more clues on the state of the US economy, after hopes for further stimulus from the US Federal Reserve strengthened risk appetite and lifted prices the previous session.
After saying on Monday that accommodative monetary policy would stay in place to support demand and drive down long-term unemployment, US Federal Reserve Chairman Ben Bernanke told ABC news on Tuesday that the Fed has not taken any options off the table and needs to be prepared to respond to however the US economy evolves.
BULGING CHINA STOCKPILES
Copper stockpiles continue to mount in top consumer China, with a pick up in consumption not seen until after May.
JX Nippon Mining and Metals Corp, the parent of Japan's top copper smelter, said on Tuesday the appetite for copper in China remains weak, weighed down by swollen inventories and tight monetary policy, with destocking likely to continue until after May.
Also, China holds more than 1 million tonnes of commercial stocks of refined copper cathode currently, a level last seen in 2009, due to high imports and weak domestic demand, which may slow arrivals in the second quarter, analysts said on Tuesday.
In other metals LME nickel rebounded by 0.7 percent to $17,900 a tonne, after hitting a 2012 trough on Tuesday at $17,779 a tonne on prospects a supply glut this year.
The global nickel market was in supply surplus by 7,100 tonnes in January 2012, the latest monthly bulletin from Lisbon-based International Nickel Study Group (INSG) showed.
In early October, the INSG forecast a 70,000-tonne surplus for 2012. In 2011 the market was in surplus by 19,300 tonnes.
"Nickel is starting to look interesting as prices below $18,000 should begin to see a supply side response from some of the higher cost NPI (nickel pig iron) producers in China," RBC Capital said in a note.
Nickel pig iron is a low nickel content substitute for refined nickel in stainless steel, and less pig iron production translates into more demand for refined nickel.
"Physical premiums are starting to rise in China, but not to levels where we should see a surge in imports. Keep an eye on this market as it should be the one to watch," it added.