SG:Copper tentative as China data may lessen easing
Reuters reported that London copper edged lower in a cautious session on Thursday as investors shrugged off data that showed top copper consumer China's manufacturing sector grew faster than forecast, waiting for greater motivation to take the market higher.
Copper has risen more than 11% this year but analysts say Chinese demand has to recover strongly to justify a further increase in prices. While China's latest manufacturing data beat expectations, some think it could discourage more monetary easing by Beijing which could dent copper demand. China's official purchasing managers' index rose to 51.0 in February from 50.5 in January as new export orders for big firms bounced back.
Mr Bonnie Liu commodity analyst at Macquarie in Shanghai said that "This is also telling us that there's less possibility for China to loosen monetary policy further with the economy getting back on its feet.ā€¯
Mr Liu said that with the arbitrage window staying shut, giving the Chinese no incentive to import copper and liquidity still tight China's imports of refined copper may drop to around 250,000 tonnes in February from 335,480 tonnes in January.
China cut banks' reserve requirement ratio for the first time this year in February to spur economic growth and economists expect more such moves are in the pipeline. A separate private sector survey of China's factory activity portrayed a different picture of smaller companies lagging behind the rebound.
Three month copper on the London Metal Exchange eased 0.4% to USD 8,465 per tonne by 0707 GMT adding to 1% decline on Wednesday. The most-traded May copper contract on the Shanghai Futures Exchange fell 1.3% to close at CNY 60,290 per tonne.
