METALS – Copper Eases Amid Doubts About China Demand, Reports Reuters

Market Cautiously Watching China

• Copper stocks in China and LME warehouses take center stage

LONDON, March 30 (Reuters) – Copper prices dropped on Wednesday to their lowest levels in nearly two weeks, as concerns grew over insufficient demand from China, the world’s top metals buyer.

Benchmark copper on the London Metal Exchange closed at $9,381 a tonne, down from $9,590 at Tuesday’s close. This decline signals a potential 5-percent decrease for March, marking its first monthly drop since June 2010. Earlier in the day, prices fell to $9,341, approximately 8 percent below the record high of $10,190 reached on February 15.

"All bets were placed on China," noted Eugen Weinberg, an analyst at Commerzbank. "The sentiment in China is less optimistic compared to the prevailing positivity in Europe or the U.S.," he continued. Analysts report that China has largely been absent from the copper market for several months, raising doubts about when it might re-enter and whether prices will continue to decline in the meantime.

Concerns about surplus copper stocks in China also contributed to the cautious outlook. Nic Brown, an analyst at Natixis, commented, "We’re wary about the copper market’s prospects… It may reflect monetary tightening influencing copper demand or simply a reduction of stockpiles accumulated back in 2009."

The State Reserves Bureau and consumers in China are believed to have amassed significant copper inventories during 2009, when prices fluctuated between $3,000 and $7,500 a tonne.

"The market is anxious, monitoring the situation and uncertain if China will engage in copper purchases this year," said a trader. He added that ongoing crises in Japan and the Middle East are deterring investor activity as they await developments that might impact overall growth.

The market managed to recover slightly after U.S. private payrolls data indicated that 201,000 jobs were added in March, aligning with expectations and prompting a slight dip in the dollar’s value against the euro.

A Traditional Strong Quarter Ahead

Traders and analysts are keenly observing what will transpire in the second quarter, typically the strongest in terms of demand, as China usually increases purchases in anticipation of a construction surge in the third quarter.

According to Standard Bank, "Anecdotal evidence suggests approximately 600,000 tonnes of refined copper are currently stored in bonded warehouses in Shanghai, with an additional 100,000 tonnes in southern ports."

Additionally, copper stocks in London Metal Exchange warehouses are becoming a focal point, now near 440,000 tonnes, which is an increase of more than 25 percent since early December and the highest level since July of last year.

In other metals, zinc closed at $2,338 a tonne compared to $2,375, while lead, untraded at the close, was last bid at $2,655, down from $2,685. Tin ended at $31,250 a tonne, down from the previous closing of $31,550, and stainless steel ingredient nickel closed at $26,030 a tonne, down from $26,600.

Aluminum reached a peak of $2,654 a tonne before closing at $2,629, maintaining its position at the highest since September 2008. Deutsche Bank remarked that rising input costs, coupled with a reduction in global nuclear power capacity, are likely to sustain elevated energy prices, supporting aluminum prices in the medium term.

Metal Prices Overview

• Copper on COMEX: 428.05 cents/lb (-1.52%)
• LME Aluminum: $2,629.00 (-0.72%)
• LME Copper: $9,380.00 (-2.19%)
• LME Lead: $2,655.00 (-1.12%)
• LME Nickel: $26,025.00 (-2.16%)
• LME Tin: $31,225.00 (-1.65%)
• LME Zinc: $2,335.00 (-1.68%)

This summary provides an overview of current market conditions, emphasizing the uncertainties surrounding Chinese demand and the implications for copper prices and other metals.