Copper slipped on Monday, weighed down by a stronger dollar and signs Beijing's easing measures are successfully cooling the red hot property market and steering the world's top consumer of metals away from a hard landing.
Three-month copper traded down 0.6 percent at $7,300 a tonne at 12:50 SA time.
Prices have shed one quarter of their value since the start of the year, and have so far dropped by 7.4 percent this month as investors nd industry cut exposure to industrial metals given a slowing outlook for the global economy.
“We had a pretty strong close to the week on Friday and I think the news out over the weekend about Chinese property prices has probably been enough to stave off some of that positivity,” analyst Gayle Berry of Barclays Capital said
“One of the main concerns the market has about China is with the property sector so I think it probably read the data over the weekend as being negative, so that's why we've seen prices off this morning,” she added.
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, away from its top priority of calming inflation just a few months ago.
Tight credit markets in China have curbed copper purchases.
Also weighing on metals was a stronger dollar against the euro, making dollar-priced commodities more expensive for holders of other currencies.
Fears of sovereign downgrades over the euro zone 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.
DEMAND SUPPORT
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 percent 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 $1,977 a tonne, down from $2,005 on Friday. Prices hit their lowest since July 2010 last week at$1,955.75 a tonne.
Across other metals, zinc, used in galvanizing was at $1,863.50 from $1,868 while battery material lead was at $1,953
from $1,960 and nickel stood at $18,450 from $18,550.
Tin was at $18,775 from $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