SINGAPORE, Dec 3: London copper was stuck close to its lowest in nearly two weeks on Tuesday after surprisingly robust U.S. Factory data bolstered expectations the Federal Reserve could trim its commodity-friendly stimulus before year-end.
A gauge of U.S. Factory activity hit a 2-1/2-year high in November and construction spending increased solidly in October, brightening the economic outlook as the year winds down.
The U.S. Report could bring the Fed a step closer to scaling back its bond-buying stimulus programme. The data also pushed the euro to a one-week low against the dollar, adding to headwinds for metals.
‘We’ve reached the situation where if it’s good news for economic growth, it’s somehow bad news for prices,’ said analyst Sijin Cheng at Barclays in Singapore.
‘Today’s fall is a reaction to a stronger dollar. We saw good manufacturing data, but it’s all about tapering – and we’re going to see more of these kind of moves,’ she added.
Three-month copper on the London Metal Exchange was little changed at $6,980.50 a tonne by 0114 GMT. It shed 1.1 percent the session before.
London copper prices hit their lowest since Nov. 21 at $6,965 a tonne on Monday. Their next level of support is $6,910, the three-month low tipped on Nov. 19.
The most-traded February copper contract on the Shanghai Futures Exchange fell 0.75 percent to 50,230 yuan ($8,200) a tonne.
Increased demand boosted global manufacturing activity last month as Chinese output suggested improvement in the world’s second largest economy.
China is the world’s top consumer of most commodities, accounting for around 40 percent of refined copper demand.
Among other metals, Indonesia’s tin exports picked up in November to around two thirds of typical levels, Reuters analysis of exchange data showed, recovering from a two-month slump triggered by a change in the country’s export rules.
‘A lot of Indonesian tin is now available for January arrival, resulting in premium erosion … Most expect this trend to continue, as consumers back off expecting lower premiums and lower prices,’ said a London trader.
‘Demand is still poor, but slightly improving from recent months, but needs to pick up substantially in 2014 to absorb tin units coming to market. Many customers will rely on the spot market for supply, particularly as most merchants have stocks to carry into 2014 from 2013.’
(AGENCIES)
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