Copper fell to its lowest in a month on Tuesday, pressured by soft Chinese copper import figures and a bearish wider economic backdrop after Friday's disappointing US employment data sent share prices lower and bund yields lower.
Losses were limited however by the view that China's economic slowdown was not drastic, with offtake for copper seen kicking in towards the end of this quarter or beginning of the next one.
Investors also hung on to the possibility that China and the United States would roll out monetary loosening policies to boost growth.
Three-month copper on the London Metal Exchange was down 1.6 percent at $8,228.25 tonne by 12:20 SA time, after rising 0.1 percent last Thursday ahead of Easter holiday closures.
“It is clear that the Chinese (fabricators) were simply stocking up on copper, expecting a seasonal pickup - perhaps towards the end of the second quarter or the second half of this year,” Andrey Kryuchenkov, analyst at VTB Capital in London,
adding that there was probably an element of nerves while waiting for Chinese offtake to pick up.
He also noted that the market had pretty much stuck rigidly to a $8,200-$8,700 range since late January, with a unsustained push to the downside around the end of March.
“Don't expect sustained gains here without Chinese offtake coming in,” he added.
China's imports of copper fell 4.6 percent to 462,182 tonnes in March from 484,569 tonnes in the previous month, data from the General Administration of Customs showed.
Analysts said this was a reflection of weaker real demand for the metal and a decrease in copper financing deals in China.
This came on the heels of data on Monday showing China's annual inflation rate jumping more than expected in March to 3.6 percent as food prices remained volatile.
“The macroeconomics of China and other major economies generally set a pessimistic tone for trading but hopes of a QE3 in the US and more monetary easing in China is helping to keep prices up,” said CITIC Newedge trader Eric Liu.
The US nonfarm payrolls report released on Friday showed growth of just 120,000 in March, far below the expected increase of 203,000.
A Reuters poll on Monday showed most major Wall Street firms expect anaemic growth in the jobs market and a struggling economic recovery to force the Federal Reserve to undertake another massive round of monetary stimulus.
Also, helping to moderate investors' pessimism was the view that China will avoid a hard landing. Customs data also showed a $5.35 billion trade surplus in March as import growth eased back from a 13-month peak while exports grew faster than expected.
In other base metals, aluminium fell 0.8 percent TO trade at $2,091, while tin was 2 percent weaker at$22,700.
Refined tin shipments from Indonesia, the world's top exporter, fell 4.9 percent in March to 8,607.71 tonnes from 9,051.46 tonnes a year earlier, a trade ministry official said on Tuesday. - Reuters