SG:LME copper edges up and growth worries cap gains
Reuters reported that London copper edged up but prices were still set for their biggest weekly loss in two months after European Central Bank inaction disappointed markets and as worries over global growth dragged on the outlook for metals.
Commodity prices fell on Thursday and copper hit 6 week lows after ECB President Mr Mario Draghi failed to offer immediate action to shore up the fragile euro zone economy which the market had expected to come via an announcement of large scale bond purchases.
That followed a string of dismal manufacturing sector reports from China, Europe and the United States this week with only a small gleam of improvement seen in China's small and medium sized private sector companies.
China accounted for more than 45% of global commodities demand and 40 percent of refined copper consumption last year and infrastructure spending is expected to lend some support to copper prices.
Commodities analyst Ms Bonnie Liu of Macquarie in Singapore said that "Of course the export market is one of the driving forces of the Chinese economy but don't forget about China's infrastructure investment plans. We are quite constructive about the Q4 outlook. We see lower prices as a buying opportunity. Demand is slowly but steadily improving."
The Ministry of Railways said that China will hike railway spending by CNY 64 billion to CNY 580 billion in 2012 updating an investment plan published this month. Three month copper on the London Metal Exchange traded at USD 7,360 per tonne by 0707 GMT up 0.42% from the previous session when it hit its lowest since June 22nd 2012.
Prices have dropped about 3% so far this week on track for their biggest weekly decline in two months. The most-traded November copper contract on the Shanghai Futures Exchange slipped 1.01% to close at CNY 54,100 per tonne.
The European Central Bank indicated it may again start buying government bonds to reduce crippling Spanish and Italian borrowing costs but the conditions it set and the dissenting voice of its key German member disappointed markets.
Mr Mario Draghi president of ECB indicated that any intervention would not come before September and only if governments activated the euro zone's bail out funds to join the ECB in buying bonds.
