World Economy

Copper Hits 6-Week Low

Copper Hits 6-Week LowCopper Hits 6-Week Low

Copper pared losses and was steady after hitting a six-week low earlier on Friday amid worries over a seasonal demand slowdown from top buyer China, though continued draws in London Metal Exchange stockpiles put a floor under prices.

Daily LME data showed copper stocks fell to 315,125 tons, their lowest point since early March and further denting long held expectations that the copper market will record a large surplus this year, Reuters reported.

The seasonally strongest quarter for copper demand in China is passing its peak with factories eyeing a summer production slowdown, but some believe falling copper stocks show that demand might not actually be that thin.

“We’ve seen a tightening in the cathode market in the second quarter, but will that trend be sustained going into summer? Our overall view is you’re not going to see a significant softening in copper market fundamentals over the next few months. LME stock will draw at least in June and July,” said Nicholas Snowdon, metals analyst at Standard Chartered.

LME copper fell to $5,885 a ton, its weakest since April 23, before paring losses to trade little changed at $5,918.50 a ton at 1037 GMT. Prices were on track for a third consecutive weekly fall.

“If the May copper import figures due to be published in the next week turn out to confirm robust Chinese demand, as we anticipate, this will probably put the brakes on the price slide,” said Commerzbank in a note.

Across other metals, LME nickel was down 0.5 percent at $12,880 a ton, but was set to close the week up around 2 percent on expectations that China will eventually turn to refined nickel as its ore stockpiles drop.

“We still expect a large deficit in 2016, but it will take longer to run down excess inventories,” said BNP Paribas in a note. The bank issued a trading recommendation to retain existing ‘long’ or buy positions in nickel on a risk-reward basis, but said there was no hurry to initiate fresh longs.

Lead fell 0.6 percent at $1,915 a ton on the view that the price rally seen between March and late April this year was overdone given the market is still well supplied.