By Naveen Thukral
SINGAPORE, June 20 (Reuters) - London copper slid to a
seven-week low on Thursday, dragged down by the U.S. Federal
Reserve's plan to start scaling back its stimulus later this
year and further evidence of slowing growth in China.
Commodities came under pressure and Asian shares deepened
losses after Fed Chairman Ben Bernanke said the central bank may
reduce its bond-buying program with the goal of ending it in
mid-2014 -- giving markets a more explicit timeline for the
rollback than they had expected.
Three-month copper on the London Metal Exchange
stretched its losses into a fourth session, dropping 1.4
percent to $6,860 a tonne by 0701 GMT -- its lowest since May 2.
The most-traded copper contract on the Shanghai Futures
Exchange lost 2.1 percent to 49,720 yuan a tonne, also
a near 7-week low.
'Every year we were using some kind of stimulus to kick
start the economy and it looks like this year we will not get
it,' said analyst Dominic Schnider of UBS Wealth Management in
Singapore. 'There is still room for a 10 percent fall in base
metals if we are not going to see any acceleration or demand
The Fed's bond buying has largely supported commodities by
lowering the value of the U.S. dollar and making assets priced
in the greenback cheaper for holders of other currencies. But
following the latest Fed comments, the dollar has firmed.
Adding more pressure on metal prices was weak data from
China, the world's top copper consumer.
Activity in China's vast manufacturing sector weakened in
June to a 9-month low as new orders faltered, a preliminary
survey of purchasing managers showed, reinforcing signs of tepid
economic growth in the second quarter.
The flash HSBC Purchasing Managers' Index fell to 48.3 in
June from May's final reading of 49.2, drifting further away
from the 50-point level demarcating expansion from contraction.
'China's slow down is more pronounced than everybody
thought,' said Schnider. 'The surplus that we have of up to 3
percent in most of the metals will continue and prices will get
But, some fundamental issues are supporting copper prices.
The world's second-largest copper mine, Freeport McMoRan
Copper and Gold Inc's Grasberg in Indonesia, remains closed five
weeks after a training tunnel collapse killed 28 workers.
In China, a shortage of cash is boosting imports of copper
as a financing tool, pushing up premiums for spot refined metal
supplies from overseas to near four-year highs.
But inventories of copper in warehouses monitored by the LME
have been climbing, which has contributed to the metal's almost
13 percent fall so far this year.
Aluminium inventories in LME-monitored warehouses have also
surged this week, with data on Wednesday showing Detroit
accepting almost 60,000 tonnes of the metal, setting a new
record high for total stocks at 5.4 million tonnes.
Aluminium slid 1 percent to its lowest since October
Base metals prices at 0701 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 6860.00 -100.00 -1.44 -13.50
SHFE CU FUT OCT3 49720 -1050 -2.07 -14.17
HG COPPER JUL3 3.09 -0.05 -1.56 -15.35
LME Alum 1812.50 -17.50 -0.96 -12.57
SHFE AL FUT OCT3 14360 -160 -1.10 -8.36
LME Zinc 1838.50 -22.50 -1.21 -11.61
SHFE ZN FUT OCT3 14380 -160 -1.10 -10.43
LME Nickel 13880.00 -320.00 -2.25 -18.64
LME Lead 2036.00 -30.00 -1.45 -12.62
SHFE PB FUT 13995.00 -145.00 -1.03 -12.80
LME Tin 19850.00 -250.00 -1.24 -15.17
LME/Shanghai arb^ -717
Shanghai and COMEX contracts show most active months
^ LME 3-month copper in yuan, including 17 pct VAT, minus SHFE third month
(Editing by Himani Sarkar)
Keywords: MARKETS METALS/
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