SG:Chinese copper demand concerns add to Greek uncertainty
Dow Jones reported that copper prices fell amid uncertainty surrounding the resolution of the Greek debt crisis and renewed doubts about Chinese demand.
The most actively traded contract for July delivery, settled down US4.70 cents or 1.2% at USD 4.0515 per pound on the Comex division of the New York Mercantile Exchange. It pared losses after hitting a low of USD 4.0345 a pound as some other commodities, such as crude oil were also weaker.
Mr Rob Kurzatkowski senior commodities analyst with OptionsXpress said that copper was taking some cues from precious metals. Gold fell below the USD 1500 level earlier in the session and remained below that psychological level as copper closed.
Mr Kurzatkowski said that while copper broke below the USD 4 mark in recent weeks buyers came into the market at the lower prices and traders are comfortable with the current price levels.
Traders remain concerned about Greek's debt crisis as the country works to avoid a default and possible contagion to other euro zone economies. The Greek parliament is expected to vote on Wednesday on 5 year austerity plan, another necessary step to qualify for further financial aid from fellow euro zone members.
Copper traders worry about slower economic activity in Europe affecting copper prices, though the region doesn't use as much as No 1 consumer China. Copper is widely used in everyday products ranging from tablet computers to cars and demand for these goods wanes when the economy slows.
Mr Kurzatkowski said that base metals traders are also focused on growth in China. A housing boom and growing suburban sprawl in the country is a positive factor in copper demand. Persistent Chinese inflation could hamper that demand if the government moves further to tighten monetary policy. The overall inflationary picture there is still much higher than government would like to see.
He said that copper futures are expected to stay around the USD 4 level unless things improve economically or we see China step in and do something drastic.
