NEW YORK/LONDON (Reuters) - Copper rose in moderate dealings on Monday as another large withdrawal in warehouse stocks and an improved economic outlook in the United States bolstered the Western world’s demand prospects at a time when China’s near-term needs remained unclear.
The gains helped copper prices stay buoyant within the upper end of a months-long trading range roughly between $8,100 per tonne ($3.70 per lb) and $8,800 per tonne ($4 per lb), with any additional upside likely to lose momentum as China’s economy continues to slow.
Latest data showed Chinese home prices fell in February from January for a fifth consecutive month and were expected to continue heading lower in coming months.
A cooler property market not only depresses demand for base metals as construction materials, but also dampens consumption from the home appliances sector, another key consumer of copper.
“We do not see expect to see metals do much over the short-term; although the U.S. recovery seems to be on track, it is showing tentative signs of topping out,” said metals analyst Edward Meir at INTL FCStone.
“More of a concern is the slowdown in China, which we suspect is actually worse than the official numbers suggest.”
China cut its growth target for 2012 earlier this month, but its top planning agency has vowed to keep relatively fast growth as its economic policy priority.
London Metal Exchange (LME) benchmark three-month copper closed up $60 at $8,570 a tonne.
In New York, the May COMEX contract rose 3.10 cents to settle at $3.9090 per lb, after dealing in a session range between $3.8580 and $3.9195.
Volumes were slow to get moving at the start of the week. A little more than 42,500 lots traded in late New York business, down about 40 percent from the 30-day norm, according to preliminary Thomson Reuters data.
Still, prices of the red metal are up about 13 percent on the year as central banks in the developed world pumped money into their economies, China restocked and risks related to Europe’s debt crisis receded.
“We had a strong high in January and then China got to the new year and it’s a traditional seasonal lull (in demand) so things calmed down and copper stayed range bound,” said VTB Capital analyst Andrey Kryuchenkov.
“When China comes back, and they will come back, copper is set to benefit. (Also) the U.S. economy is fairly positive, that has helped equities and is good as far as base metals are concerned.”
Further support stemmed from the currency markets on Monday. The dollar fell against a basket of currencies .DXY, helping to underpin dollar-denominated assets like copper by making them less expensive for consumers using other currencies. <USD/>
COMEX copper technicals: link.reuters.com/mas27s
LME copper 24-hour technical outlook:
CFTC commitment of traders:
LME copper stocks continued to slide, with latest data showing stock down 1,250 tonnes at 262,575 tonnes, their lowest since July 2009, with more than 30 percent of those stocks set to leave warehouses shortly.
Analysts suspect the metal is not being consumed but is building up in China instead. Data on Friday showed Shanghai stocks up 2,495 tonnes at a decade high of 227,276 tonnes.
“The credit that the government has injected into the market since December now exists largely in the form of copper stocks. We haven’t seen any solid recovery in consumption,” said Bonnie Liu, an analyst at Macquarie in Shanghai.
In other metals, packaging material aluminum closed up $18 at $2,275 a tonne. Prices have risen nearly 12 percent so far this year, after an 18 percent decline in 2011.
Oversupply, slower demand and higher costs have dealt a heavy blow to aluminum producers.
United Company RUSAL Plc (0486.HK), the world’s top aluminum producer, reported a 92 percent drop in yearly net profit while Aluminum Corp of China Ltd (Chalco) (601600.SS) (2600.HK) said its fourth-quarter net loss was bigger than expected.
Metal Prices at 1818 GMT
Metal Last Change Pct Move End 2011 Ytd Pct
COMEX Cu 390.90 3.10 +0.80 343.60 13.77
LME Alum 2273.00 22.00 +0.98 2020.00 12.52
LME Cu 8570.00 60.00 +0.71 7600.00 12.76
LME Lead 2104.00 -4.00 -0.19 2035.00 3.39
LME Nickel 19045.00 145.00 +0.77 18710.00 1.79
LME Tin 0.00 -23400.00 -100.00 19200.00 -100.00
LME Zinc 2077.00 -1.00 -0.05 1845.00 12.57
SHFE Alu 16275.00 15.00 +0.09 15845.00 2.71
SHFE Cu* 60300.00 -480.00 -0.79 55360.00 8.92
SHFE Zin 15875.00 -105.00 -0.66 14795.00 7.30 ** Benchmark month for COMEX copper * 3rd contract month for SHFE AL, CU and ZN SHFE ZN began trading on 26/3/07
Additional reporting by Susan Thomas in London; Editing by Marguerita Choy