* Investors stay cautious ahead of euro zone PMI data
* HSBC China flash PMI still under 50, at 49.1 but higher
* Coming up: Euro zone Markit Mfg flash PMI, Apr; 0758 GMT
(Updates prices, adds quotes, details)
By Carrie Ho
SHANGHAI, April 23 Copper futures retreated on
Monday as data showing a moderate increase in factory activity
in top consumer China failed to allay demand concerns, while
investors remained cautious ahead of similar data from the euro
zone later in the day.
The rise in the China HSBC flash Purchasing Managers Index
(PMI), suggesting that industrial activity picked up in April
from March, was not big enough to trigger buying of risk assets
as it stayed under 50, signifying contracting economic activity.
HSBC's index, which focuses on smaller Chinese manufacturing
firms painted a more bearish state of factory activity in China
versus the more upbeat official PMI data that centres on large
Three-month copper on the London Metal Exchange fell
1.6 percent to $8,064 a tonne by 0820 GMT.
The most-active July copper contract on the Shanghai Futures
Exchange shed 0.7 percent to close at 57,330 yuan
($9,100) a tonne.
Traders said copper futures were weighed by uncertainty over
global demand and investors were seeking more definite
macroeconomic cues and technical signals.
"Copper is still trying to eke out a new technical range,
which is why prices have been fluctuating within narrow ranges.
There are no clear bearish or bullish trends now. Traders are
waiting to see what happens next and are careful about open
positions," said a Shanghai-based trader.
"Although the Chinese PMI numbers showed the country's
industrial activity improving from March, overall sentiment is
still cautious as we await more data from the euro zone tonight
and while Chinese copper demand remains soft," said Orient
Futures derivatives director Andy Du.
Prices have also been pressured by high warehouse stockpiles
in Shanghai, which Goldman Sachs last week pegged at 620,000
But the stock levels may ease slightly as high cash prices
for LME copper are spurring re-exports of Shanghai bonded
warehouse copper to nearby LME warehouses in a bid to ease
backwardation, when the near term contract trades below the
expected spot price at the time of maturity.
"Although the mood is gloomy today, copper prices won't
crash as there is still substantial real demand for the metal,
albeit weaker than previous years," said CIFCO analyst Zhou Jie.
"We can count on Chinese consumers to restock a little
whenever prices fall beyond a technical milestone. Hopes of more
monetary loosening by Beijing also prevent too much pessimism in
the markets," he added.
LME copper surged last week, posting its best weekly
performance since February, with most of the gains coming on
Friday, when strong first-quarter earnings results in the United
States and an unexpected rise in German business sentiment
bolstered investors' appetite.
Worries about Europe's economic health also eased slightly
after leading world economies pledged $430 billion in new
funding for the International Monetary Fund, more than doubling
its lending power in a bid to protect the global economy.
Meanwhile, Shanghai lead continues to outperform
other base metals on the ShFE, trading flat where most others
have dipped during the session. It had also risen during the two
previous weeks where other metals in the complex had fallen.
"Lead futures are supported by the fact that prices have
fallen very close to its marginal costs of $15,500. Also,
available stockpiles in China are quite low, while its main
downstream users (the automobiles and e-bikes industries) are
doing well," said a Beijing-based trader.
Base metals prices at 0750 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 8037.00 -153.00 -1.87 5.75
SHFE CU FUT JUL2 57330 -420 -0.73 3.06
LME Alum 2062.75 -21.25 -1.02 2.12
SHFE AL FUT JUL2 16090 10 +0.06 1.58
HG COPPER MAY2 362.75 -7.05 -1.91 5.57
LME Zinc 2000.50 -25.50 -1.26 8.43
SHFE ZN FUT JUL2 15480 -40 -0.26 4.63
LME Nickel 17700.00 -105.00 -0.59 -5.40
LME Lead 2086.50 -39.00 -1.83 2.53
SHFE PB FUT 15730 0 +0.00 2.88
LME Tin 21250.00 -250.00 -1.16 10.68
LME/Shanghai arb 2001
Shanghai and COMEX contracts show most active months
^ LME 3-m copper in yuan, including 17 pct VAT, minus SHFE
($1 = 6.3085 Chinese yuan)
(Editing by Miral Fahmy and Ramya Venugopal)