Copper down on weak China service data, uncertainty over property measures

5th September 2023

By: Reuters


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LONDON - Prices for copper in London fell on Tuesday under pressure from weak service sector data from China suggesting uncertain post-pandemic recovery in the top metals consumer.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was down 0.5% at $8 410 a metric ton by 09:19 GMT.

The metal, used in power and construction, is falling for the second day in a row after two weeks of growth amid uncertainty about the effect from China's measures to support its property market on actual demand for metals.

"Metals prices are paring gains made on the back of stimulus measures by Beijing to turn around the flagging property market that were announced last week," said Ewa Manthey, commodities strategist at ING.

"The market will be now assessing how these recent measures will feed through to real estate activity and how supportive they will be for metals demand."

A private-sector survey showed on Tuesday that China's services activity expanded at the slowest pace in eight months in August as weak demand continued to dog the world's second-largest economy and stimulus failed to meaningfully revive consumption.

"Until the market sees sustainable recovery in China, we will struggle to see a fundamental move higher for metals," Manthey said.

In the euro zone, the decline in business activity accelerated faster than initially thought last month.

Weak global activity data also sent the US currency higher, making dollar-priced metals more expensive for buyers holding other currencies. 

Meanwhile, LME aluminium CMAL3 shed 1.0% to $2 190.5 a ton, zinc CMZN3 declined 0.3% to $2 471 a ton, nickel CMNI3 fell 0.1% to $21 020 and lead CMPB3 lost 0.7% to $2 208.5.

Tin CMSN3 was the only rising LME metal on Tuesday - up 0.5% at $26 500, after touching its highest since August 11 of $26 585.

It also hit the highest since the same date on the Shanghai Futures Exchange SSNcv1 amid ongoing uncertainty over supply from Myanmar to China.

Edited by Reuters



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