Copper falls on China data

Copper fell on Tuesday as investors returning from the Easter long weekend digested data showing a plunge in China's imports of refined copper and the market remained nervous amid volatility in precious metals.

Three-month copper on the London Metal Exchange fell 2.1 percent to $9,500 at 12:18 SA time from $9,700 when the market closed on Thursday before the long weekend started on Friday.

“I think the overall story is as much to do with the shenanigans in silver yesterday, which was so volatile,” said BNP Paribas strategist Stephen Briggs.

“So I think that's causing a bit of nervousness and perhaps the markets are still digesting what were definitely not bullish figures for the Chinese trade data.”

China's refined copper imports dropped 43 percent in March from the same month last year due to high stocks and strong international prices, although the figure was a rebound from the holiday-shortened month of February.

Silver surged as much as 8 percent on Monday before pulling back sharply when a failure to pierce the record high from 1980 triggered technical selling amid record volume in U.S. futures. On Tuesday, spot silver fell nearly 5 percent.

VOLATILE

Base metals trading is expected to remain volatile in another holiday-shortened week and the focus is likely to shift to data over the next few days that will show how the U.S. and British economies fared in the first quarter.

“With US GDP, US durable goods orders and Eurozone industrial new orders in focus, the (base metals) sector has plenty of information to digest,” Credit Suisse said in a note.

“We think the data could point to a modest slowdown in economic activity, but generally confirm that the recovery remains on track. That could set a rather positive tone for trading.”

Stocks levels would increasingly become an important factor to watch, Credit Suisse said. “The positive economic backdrop will have to be confirmed by declining inventories for the rally to remain sustainable.”

Zinc was the biggest loser among base metals, falling more than 4 percent to $2,258 from Thursday's close.

Technical selling is likely to have been set off once it breached the 200 day moving average of $2,290, a key signal watched by funds.

At 816,925 tonnes, zinc inventories are at a new high since July 1995, signalling poor demand for the metal used in galvanizing.

“Zinc is doing badly relative to other metals because it's got lousy fundamentals,” Briggs said. “More generally, and as always, aluminium is more resilient than the others.”

Aluminium was at $2,740 at 12:21 SA time from $2,745. Tin fell to an intraday low of $32,001 from $32,700, but clawed back some losses to $32,510.

China on Tuesday raised the bar for polluters in a plan that included restricting new projects for mining tin, tungsten, molybdenum, antimony and rare earths.

Battery material lead was at $2,538 from $2,601 and nickel was $26,200 from $26,900. – Reuters

(Source: http://www.iol.co.za/business/markets/commodities/copper-falls-on-china-data-1.1061343)