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Copper price under pressure

PRICES of base metals including copper are expected to remain under pressure this month and next month as a contraction in China’s factory activity continues to affect demand for the commodities, Standard Chartered Bank London says.
According to Reuters, the bank says in a note issued in London that the months under review are anticipated to be characterised by low prices of copper and other base metals on the international market.
“We continue to believe that at least the January-February period will be characterised by further pressure on the base metals,” Standard Chartered bank says.
The bank however says improved global demand conditions remain a key requirement for a sustained recovery in base metal prices, although China’s economic data for December shows no obvious signal of improvement.
But prices of copper on Tuesday bounced after China pumped in an estimated US $20 billion to stabilise its equity and currency markets.
Benchmark copper on the London Metal Exchange (LME) ended up 0.8 percent at US$ 4,645 a tonne on Tuesday, having touched a two-week low of US$ 4,591 on Monday.
However, worries over slowing demand in the world’s top metals user kept gains firmly in check.
“China stocks performed a little better on Tuesday thanks to the huge cash injection, but the yuan fell to a four-and-a -half year low,” Reuters reports.
Reuters reports that stocks slid seven percent on Monday and trade was suspended nationwide after surveys showed factory activity shrank again in December.
Commenting on the development, Societe Generale analyst Robin Bhar said:“The rebound in stocks overnight helped metals … (but) there’s a lot of bearishness over China; a hard landing could be difficult to avoid. We view more downside over the rest of the year.”
A contraction in China’s factory activity for the 10th straight month in December, and at a sharper pace than in November, has dampened hopes that the world’s second-largest economy will enter 2016 on a steadier footing.