SG:LME copper inches up from 2-month low, US fiscal woes weigh
Reuters reported that London copper rose from the previous session's 2 month low but prices are likely to stay subdued by slack Chinese demand and worries over US fiscal measures that if enacted may tip the world's largest economy into recession.
Concerns about this so called fiscal cliff, which will extract some USD 600 billion from the US economy, sent prices diving on Wednesday to their lowest since September 3rd 2012.
A Shanghai based trader said that "London copper is back up again today mostly on short-covering after investors' worries over the US fiscal cliff led to a steep fall late in yesterday's session. But over the longer term, copper prices may not stay up for long as Chinese physical demand is still weak while the global economy still looks shaky.ā€¯
Three month copper on the London Metal Exchange edged up 0.1 percent to USD 7,610 per tonne by 0401 GMT after falling to USD 7,563.25 in the previous session. The most active copper contract on the Shanghai Futures Exchange, for February, fell 1.6% to CNY 55,680 per tonne catching up with the previous session's losses in the London contract.
Investors are also eyeing China's once a decade leadership transition event, the 18th Party Congress which opened on Thursday, for hints on any imminent stimulus measures or future policy directions that may affect metals demand.
Mr Andy Du derivatives director of Orient Futures said that "So far, contents of speeches from the 18th Party Congress have been within expectations. There hasn't been anything particularly encouraging to investors."
The outlook for copper looks gloomy so far, as Europe remains mired in financial woes; the United States faces a fiscal crisis and Chinese demand is still weak.
Analysts have warned that supplies of copper concentrates are growing at a rate that may eventually cause a jump in global refined copper inventories.
Research firm Minmetals Futures said that the Q3 jump in Chilean copper concentrates exports and the continued rise in China's copper concentrates production would eventually push refined global copper output up.
Much of the excess supplies may end up in ShFE warehouses. They may also end up in LME Asian warehouses through Chinese smelters that are able to export copper under discounted duties if they booked these under their tolling book.
