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Weekly UpdatesCOPPER PRICES CONTINUED their recent rally into early March, with the three-month price on the London Metal Exchange (LME) registering another record on 6 March of US$8,882 a tonne. Prices were supported by ongoing strong investor demand and further dollar weakness against the euro and yen. The 6 March high marked a 25 per cent advance on where LME copper prices started 2008.
However, weakness in global equity markets and the increasingly poor outlook for the US economy, which have sparked concern about demand prospects for the metal, started to take its toll on copper prices as March wore on. The apparent reluctance of China to buy copper at current price levels following its short-live pre- and post-lunar New Year stocking up was also a factor.
By 12 March, the three-month price on LME had sunk to US$8,400 a tonne and by close of trading the following day had lost a further US$70 a tonne to close the day at US$8,330.
China's February imports of unwrought copper and copper fabricated products fell 5% from January to 226,980 tonnes, according to preliminary data from China's General Administration of Customs. This figure is also 2,097 tonnes less than the corresponding period in 2007. This takes China's imports for the first two months of the year to 466,377 tonnes, 0.5 per cent lower year-on-year.
Together with rising Shanghai copper inventory, there is a growing likelihood that the Chinese market is oversupplied, a trader said. Copper inventories on the Shanghai exchange had risen some 161 per cent since February to reach 52,840 tonnes by 7 March. China's copper imports are expected to fall further in March as rising LME prices make arbitrage less attractive, said the trader.
To some extent, copper's price fall has been limited by renewed declines in LME inventories of the metal. On 13 March, LME copper inventories stood at a six-month low of 127,950 tonnes.
However, with the metal remaining vulnerable on the demand side from a US economic slowdown and efforts by the Chinese to cool their booming economy, as well as investors likely to remain risk aversive in the current weak equities markets, copper is expected to see further price falls in the coming weeks, according to analysts.
FEED