FX:Copper drops on weaker China growth outlook, Greece concerns
Forexpros - Copper futures were down on Monday, amid concern of slowing consumption in China after the country lowered its economic growth goal, while renewed concerns over the handling of Greece’s debt crisis further weighed.
On the Comex division of the New York Mercantile Exchange, copper futures for May delivery traded at USD3.874 a pound during European morning trade, declining 0.75%.
It earlier fell by as much as 1.1% to trade at a two-day low of USD3.862 a pound.
Concerns over a slowdown in Chinese economic growth and its impact on the Asian nation’s copper demand saw the industrial metal come under selling pressure.
In a speech to the National People’s Congress in Beijing earlier, Chinese Premier Wen Jiabao said the government will target an expansion of 7.5% this year and set an inflation target of 4%. The government had an 8% goal from 2005 to 2011.
China is the world’s largest copper consumer, accounting for almost 40% of world consumption last year.
A deeper slowdown in China, the world’s second biggest economy, would impair a global expansion that is already faltering because of Europe’s debt crisis.
Copper prices have rallied nearly 12% since the start of 2012, buoyed by hopes that Chinese demand would pick up after the Lunar New Year in late-January, but demand from the Asian country has remained slack, raising concern prices could retreat sharply.
Worries over Greece’s debt burden persisted ahead of the March 8 deadline for bondholders to join the agreement under which they will exchange their existing Greek government bonds for new paper in a swap deal.
There is uncertainty over how much participation Greece will see for its bond swap. At least 66% of private sector bondholders must be willing to participate in the deal.
A failure to agree on the swap would put the country back on the brink of a messy sovereign debt default.
Fresh concerns over Spain’s fiscal health also added to the cautious mood.
Europe as a region is second in global demand for the industrial metal. Prices have tracked investor sentiment toward the euro zone’s debt crisis in recent months.
Elsewhere on the Comex, gold for April delivery fell 0.65% to trade at USD1,698.75 a troy ounce, while silver for May delivery dropped 0.95% to trade at USD34.19 a troy ounce.
