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LONDON (Dec 20): Copper slipped on Monday in thin trading as signs that the property market was cooling in top metals consumer China worsened the outlook for industrial metals demand and weighed on market sentiment.
Three-month copper traded down 0.4% at US$7,314.50 (RM23,336.91) a tonne by 1531 GMT from a close at US$7,345 a tonne last Friday. Traders said business was been pared back now ahead of year end.
Prices have shed one quarter of their value since the start of the year, and have so far dropped by more than 7% this month as a deepening eurozone debt crisis pushed investors to liquidate assets such as industrial metals deemed as riskier.
Signs of slower growth in China, the world's second largest economy, raised further concerns over slowing metals demand growth.
"Most of the big funds we saw were far more nervous about the outlook for China rather than Europe; Europe, to a certain extent, is already in the prices," said David Wilson, director of metals research and strategy at Citi.
"There's data coming out of China that is creating a little bit of cooling. As well as the Chinese property data, Chinese premiums seem to have slipped very sharply over the last week and despite prices being lower last week there hasn't been much Chinese buying to be seen."
China's November housing inflation hit its lowest level this year, a victory for Beijing's campaign to ward off property bubbles as it steadily eases monetary policy to aim for a soft landing in the world's second-largest economy.
The falling home price, in tandem with a sharp ease in China's consumer inflation in November from July's three-year peak, enables Beijing to tilt its policies more towards safeguarding economic growth, and away from its top priority of calming inflation just a few months ago.
Tight credit markets in China have curbed copper purchases.
Fears of sovereign downgrades over the eurozone debt crisis pressured the euro on Monday, while news of the death of North Korean leader Kim Jong-il fed fears of regional instability in Asia and triggered safe-haven buys.
"The path of least resistance remains to the downside, but the markets could be caught wrong-footed again if some positive news emerges. Overall we feel the down trends will rule over the medium term, but the short term is open," FastMarkets said in a note.
Still, signs that Chinese consumption is gathering speed are cushioning the downside for copper prices. China is the world's top consumer of copper, accounting for around 40% of refined demand.
"Given Chinese domestic copper stocks remain low and that the global market continues to run a small deficit, we are becoming more bullish about copper prices in 2012, especially with Chinese monetary and fiscal policy starting to ease," said Macquarie in a note.
LME stocks data on Monday showed a large drawdown of 8,475 tonnes from warehouses in the South Korean port of Gwangyang, a key departure point for shipments to China.
Meanwhile, supply constraints continue also to underpin prices. Striking workers at Freeport McMoRan Copper & Gold Inc's giant Indonesian mine delayed on Saturday until next week a plan to go back to work after a three-month strike because of technical issues, a union spokesman said.
Elsewhere, aluminium stocks held in warehouses monitored by the LME hit a record high of 4.87 million tonnes, LME data showed, as the eurozone debt crisis blunts demand as industry destocks ahead of year end.
LME aluminium traded at US$1,977 a tonne, down from US$2,005 on Friday. Prices hit their lowest since July 2010 last week at US$1,955.75 a tonne.
Across other metals, zinc was at US$1,862 from US$1,868 and lead at US$1,966 from US$1,960. Nickel changed hands at US$18,545 from US$18,550 and tin at US$18,700 from US$18,800. Following the breakdown of a self-imposed tin export ban, political infighting has broken out in the Indonesia Tin Association (ITA), a smelter organisation established to create a unified front for producers. — Reuters
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