RTRS:METALS-LME copper drops to near 1-week low after China data
* Copper underpinned by tight raw materials market -CRU
* Traders eye Fed, ECB policy moves
* Coming up: EZ Markit Mfg PMI Jul; 0758 GMT
(Updates prices)
By Melanie Burton
SINGAPORE, Aug 1 (Reuters) - London copper dropped to its
lowest in almost a week after official manufacturing data from
top metals consumer China fell short of expectations, while
fading hopes for monetary stimulus in the United States and
Europe also dragged down prices.
But copper prices pared some of their early losses after
data showed China's HSBC Purchasing Managers' Index rose to the
highest level since February, easing concerns stoked by the
official PMI figure that dropped to an eight-month low.
"Copper is likely to stay range bound for the next few
weeks. China's copper demand is not good and there's no sign of
any recovery at the moment," said Beijing-based metals analyst
Wang Ling of consultancy CRU.
Three-month copper on the London Metal Exchange
traded down 0.3 percent at $7,537 a tonne by 0706 GMT, after
touching a low of $7,487.50 earlier in the session -- lowest
since July 27. LME copper fell almost 2 percent in July.
But the chance for copper prices to corrode further are
limited with indications suggesting a low raw material pipeline
for the metal in China, Wang Ling said.
"On the raw materials side ... scrap availability is a bit
tight. So there is a chance for copper to rise. There is still
very limited room for copper to fall further," she added.
The most-traded November copper contract on the Shanghai
Futures Exchange fell about 0.5 percent to close at
54,780 yuan ($8,600) a tonne.
Wang Ling expects LME prices to trade in the $7,200-$7,800
range over August and Shanghai copper prices in the
53,000-56,000 yuan a tonne range.
Market participants are now looking towards China's August
PMI figures which they believe will be a better indicator of the
health of the world's second largest economy.
"The crucial PMI manufacturing print is August. Since 2005,
the August PMI has always been better than July. If it is not
this year, it would signal a sharp downturn in China's growth."
Standard Bank said in a research note.
More trading cues are expected later in day from a slew of
U.S. and European manufacturing sector reports.
STIMULUS MEASURES EYED
U.S. monetary authorities will hold a policy briefing and
interest rate announcement later on Wednesday.
Few analysts expect the Fed to launch more easing at the end
of its two-day meeting, but it is expected to reinforce a
commitment to an accommodative stance and could drop hints about
more measures in coming weeks.
The European Central Bank meeting on Thursday also remains a
key focal point for the market which will be looking for
detailed policy action from the ECB to shore up the debt-laden
euro zone.
"Macro news and currency issues will continue to dominate
sentiment for the foreseeable future," RBC Capital said in a
note.
Meanwhile, European banks are shrinking commodities trading
operations much faster than their U.S. rivals and reducing
risk-taking to insignificant levels to relieve the burden on
their capital levels.
Also, top miners Rio Tinto and BHP Billiton
announced on Wednesday fresh cost cutting measures to cope with
sliding commodities prices and stuttering growth.
PRICES
Base metals prices at 0706 GMT
Metal Last Change Pct Move YTD pct chg
LME Cu 7537.00 -23.00 -0.30 -0.83
SHFE CU FUT NOV2 54780 -270 -0.49 -1.05
HG COPPER SEP2 341.55 -0.20 -0.06 -0.60
LME Alum 1884.75 -6.25 -0.33 -6.70
SHFE AL FUT NOV2 15385 -65 -0.42 -2.90
LME Zinc 1833.00 -9.00 -0.49 -0.65
SHFE ZN FUT NOV2 14605 -110 -0.75 -1.28
LME Nickel 15826.00 -39.00 -0.25 -15.41
LME Lead 1915.00 -5.00 -0.26 -5.90
SHFE PB FUT 15010.00 -60.00 -0.40 -1.80
LME Tin 17998.00 -102.00 -0.56 -6.26
LME/Shanghai arb^ 1232
Shanghai and COMEX contracts show most active months
