Base metals on the London Metal Exchange were trading mixed in tight ranges in Asia Wednesday, and are expected to stay rangebound in the near term as investors remain in a wait-and-watch mode, analysts said.
Benchmark LME three-month copper was at $7,495 a metric ton at 0435 GMT, up 0.07% from its previoussettlement.
Sentiment is bearish after a sharp fall in Chinese metal imports suggested weak demand outlook and reinforced the view that Europe’s debt crisis is weighing on the global economy, Phillip Futures analyst Chung Yang said.
While China’s copper imports declined by 17.5% in June, copper production also likely fell. May copper output had fallen 1.4% from a month earlier.
“While copper is holding out well, it is likely to remain in a range,” Mr. Yang said, adding that the red metal remains vulnerable to downside risks and could fall below $7,300/ton if macroeconomic indicators continue to disappoint.
Investors await the release of minutes from the Federal Open Market Committee’s mid-June meeting later in the global day, and China’s second-quarter gross domestic product estimates and output data of key industrial metals later this week. (Hi, just out pointing that the meeting was on June 19-20)
Barclays analysts said in a note that copper inventories at LME and the Shanghai Futures Exchange have rebounded, with LME stocks up 16% since lows and SHFE stocks up 29% in a month.
However, inventories at bonded warehouses in China continue to move lower, they added.
“Although system inventories for commodities in China are relatively high, we expect inventories to normalize in next two-three months, further supported by improvement in the demand environment in second half of 2012.”
Aluminum’s market sentiment remained downbeat tracking slower Chinese imports and ongoing euro-zone debt issues, a Tokyo-based trader said.
Prices could rise in the long term, but in the short term aluminum could slip below $1,900/ton, she said, adding that Chinese metal demand continues to be an area of concern, while Japanese demand will likely to remain subdued this quarter.
Technical charts also indicate a bearish trend, with prices likely to move toward $1,850/ton, Barclays said in a note.
The charts also suggest bearishness for nickel, with the metal under more near-term pressure as it retestsrange lows ahead of retracement targets at $15,641/ton and $13,156/ton.
The following are LME three-month base metal prices at 0435 GMT and changes from the previous PM kerb:
LME 3-Mo Last Change % Change Prev PM Close Copper $7,495.00 +$5.00 +0.07% $7,490.00 Lead $1,865.25 -$8.75 -0.50% $1,874.00 Zinc $1,836.25 +$6.25 +0.30% $1,830.00 Aluminum $1,906.50 -$5.50 -0.30% $1,912.00 Nickel $16,090.00 +$40.00 +0.20% $16,050.00 Tin $18,699.00 -$76.00 -0.40% $18,775.00
By Arpan Mukherjee