SG:London copper edges up on China prospects but euro woes cap gains
BR reported that London copper inched higher buoyed by hopes China will restock on a return from holidays next week but was still set to log its largest weekly loss this year after the euro zone recession deepened more than expected at the end of 2012.
Three month copper on the London Metal Exchange traded at USD 8,251 a tonne by 0327 GMT adding 0.17% to the previous session's small 0.13% gain. Copper prices are set to close the week down around 0.50 percent. Prices have tailed back by just over a percent from 4 month peak of USD 8,346 per tonne hit in early February but are still up four percent for the year.
Mr Henry Liu head of commodity research at Mirae Asset Securities in Hong Kong said that "Right now, demand for copper is only coming from China and the US because Europe is a mess. The stock market is quite bullish and people are excited about a Chinese rebound. Given a liquidity improvement real demand for copper will pick up."
Mr Liu said that while a revival in copper demand is taking root in China, the effect on the copper market will be dampened by sky high domestic inventories. China's copper stockpiles over the year end reached record levels above 1 million tonnes.
Markets were struggling to find momentum on Friday. Asian shares eased and the euro nursed heavy losses, with investors turning cautious as weak euro zone growth data presaged a bleak outlook ahead of the G20 meeting in this session and on Saturday in Moscow.
The euro zone slipped deeper than expected into recession in the last three months of 2012 after its largest economies, Germany and France, shrank at the end of a wretched year for the region.
One bright spot was seen in the US with the number of Americans filing new claims for unemployment benefits fell more than expected last week, offering hope the sluggish labour market recovery may have picked up a step.
An executive at a top South East Asian bank said that it was still China, though, that was feeding most of the positive sentiment in Asia. People are feeling more confident about projects going forward and money has already been released.
The executive said that he thinks Chinese consumers have already started restocking and he sees real consumption improving after the Lunar New Year holiday which finishes this week.
