BR:Copper edges down to near 3-year low on China growth fears
JAKARTA: London copper futures eased on Tuesday to hover near their lowest levels in almost three years on worries a liquidity crunch in main consumer China could curb its economic growth.
Concerns about a banking crisis in China and a scaling down of US monetary stimulus have hurt commodities, with recent gains in the dollar piling additional pressure. Copper, a key indicator of industrial demand, has fallen about 16 percent this year.
Three-month copper on the London Metal Exchange hit an intraday high of $6,714.75 a tonne on bargain hunting before slipping to $6,660.00 by 0307 GMT, down $10.00. Copper fell as much as 3 percent to $6,613 on Monday, its weakest level since July 2010.
"The outlook doesn't appear too good because the Chinese government is not doing much. We have a double whammy from the US and from China," said Joyce Liu, an investment analyst at Phillip Futures.
"In China you have both slowing growth and the cash crunch, which if prolonged will affect the copper market because it will jack up the financing cost of copper importers. All of base metals are pretty much abundant now because of the slowing global economy."
China accounts for around 40 percent of global refined copper demand.
The most-traded October copper contract on the Shanghai Futures Exchange dropped 1.4 percent to 47,950 yuan ($7,803) a tonne.
China's central bank has engineered a tightening of cash in money markets as it tries to rein in excessive credit growth, especially in the lightly regulated "shadow banking" sector.
Chinese stocks extended losses even as money market rates fell back towards more normal levels as the central bank signalled a slight softening in its crackdown on easy credit by opting not to change the amount of cash in the market.
Asian shares slipped further on Tuesday as investors braced for more volatility in Chinese markets, while the dollar's rally paused after two top US Federal Reserve officials downplayed market fears of an imminent end to monetary stimulus.
"In the next few days, the commodity specific data calendar is rather thin, so prices may find it difficult to stabilise in the absence of fresh impetus," Credit Suisse said in a report.
