Copper was steady on Wednesday as
signs of slowing factory activity in China and Europe
constrained prices and attention turned to pending U.S. figures,
while a weak dollar against the euro cushioned prices.
Three-month copper on the London Metal Exchange traded at
9,210.25 at 0959 GMT from a close of $9,220 a tonne on Tuesday.
The metal used in power and construction hit its highest in
four weeks on Tuesday at $9,278.50 a tonne as it recovers from a
commodity-wide route in late May, caused by concerns over a
global economic growth slowdown.
"The fact that we're a little bit weaker is a reflection of
the weaker PMIs which have ignited people's concerns about a
slowdown in activity in China," said analyst Gayle Berry of
Barclays Capital.
"They were above expectations so the general feeling is that
you'll get another rate hike in June, so that is also making the
market a bit nervous," she said, adding that the figures were
supportive of metal demand.
Chinese factories expanded in May at their lowest pace in at
least nine months, two surveys showed on Wednesday, reinforcing
evidence that the economy is slowing under the weight of
government credit curbs and power shortages.
China is the world's top consumer of base metals.
"We're moving from what was a period of very fast expansion
in 2010 as economies went into recovery, into a more mature
phase where you'd expect to see rates of expansion slow. You
need… perspective when looking at these numbers," added Berry.
Sentiment was also tarnished by fresh signs of decline among
factories in the euro zone.
Also the softer dollar was providing a cushion for prices,
said a London trader who expects muted trade in Europe this week
with many nations off on holiday on Thursday.
Thursday is the Ascention day holiday in most parts of
Europe which may also pare back liquidity for Friday when the
closely watched U.S. non-farm rolls figures for May are due.
RISING COPPER
Later this session U.S. ADP jobs data are due at 1215 GMT
while the Institute for Supply Management releases its May
manufacturing index and Commerce Dept releases April
construction spending at 1400 GMT.
"If the (PMI)numbers disappoint, we think pullbacks
could offer buying opportunities since we expect activity
to reaccelerate moving into Q3. We favour copper and aluminium,"
Credit Suisse private banking said in a note.
Copper stocks rose by 3,075 tonnes net, the latest LME data
showed, taking total stockpiles above 470,000 tonnes for the
first time in a year, and highlighting the lack of demand in
what is usually a peak season.
Power intensive to produce, aluminium continues to find
support from news earlier this week that China will raise power
tarriffs for some consumers. It traded at $2,682 from $2,677
having hit its highest since early May on Tuesday.
"Concerns have been raised recently about Chinese aluminium
production coming under pressure as the country seeks to limit
power hungry industries and yet production has reached record
levels," said RBC Capital in a Tuesday note. "Small wonder
then that the technical buying has been met with producer
selling interest."
Tin was at $27,850 from $27,940 while zinc, used in
galvanising was at $2,267 from $2,266 on Tuesday's close.
Battery material lead was at $2,520 from $2,521 and nickel
was at $23,420 from $23,590.
Stainless steel maker Outokumpu said it will sell its
entire stake in miner Talvivaara to bolster its financial
health. Outokumpu said it has sold its 4.3% holding in
Talvivaara Mining Company to the Finnish state's investment arm.
