MN; Uncertainties on dollar rebound cause Shanghai copper to fall
SINGAPORE -
SINGAPORE, May 4 (Reuters) - Shanghai and London copper fell on Wednesday, weighed down by fears of further rebounds in the dollar and global economic uncertainty, shrugging off comments by a China central bank official that inflation will moderate in the second half.
The most-active July Shanghai copper contract SCFcv1 fell 0.9 percent to 68,410 yuan at its midday close on Wednesday as Asian shares declined and the dollar rose from near a three-year low, with falling commodity prices spooking investors and causing a broad pullback in risk taking.
"Uncertainties that the dollar may rebound are putting pressure on commodity prices," China Futures Co analyst Yang Jun said.
Reuters technical analyst Wang Tao said a drop in Shanghai copper SCFc3 towards 67,390 yuan per tonne has been confirmed.
However, Jinrui Futures analyst Guo Yong felt that there is still enough support to keep LME copper prices above $9,000, though crossing above $10,000 is unlikely in the short term.
"There are widespread expectations of supply deficit this year as reflected in healthy demand for spot copper. However, people are unwilling to stock up for the slightly longer term due to fears of wider problems in the major economies," Guosaid.
Strong U.S. data in the previous session lifted copper futures, bucking a weak trend in other commodity markets.
However, LME copper for delivery in three months fell 1.2 percent to $9,240 on Wednesday.
CHINA INFLATION
The premium for Shanghai Futures Exchange May copper extended gains to 1,180 yuan versus the July contract, its widest backwardation in two years, suggesting strong demand for prompt material.
A Chinese central bank vice governor said in remarks published on Wednesday that inflation will moderate in the second half of the year as government measures to curb price rises hit their mark.
"The comments about inflation moderating are good, but I think I'm more concerned about China's April CPI figures (due on May 11), which will give us an indication of whether further tightening measures are coming before the second half," Guo said.
