SINGAPORE (Reuters) – London copper slipped on Tuesday, tracking losses in Asian equities after a string of Chinese companies missed their earnings targets, while bleak demand expectations from Chinese copper consumers also discouraged buying.
Three-month copper on the London Metal Exchange fell 0.62 percent to $8,516.75 per tonne by 0849 GMT, having risen to almost $8,600 earlier in the session.
Copper hit its highest in two weeks at $8,690 on Friday and is up more than 12 percent this year, but prices have struggled to gain traction above this level.
The most-traded June copper contract on the Shanghai Futures Exchange eased 0.08 percent to 60,350 yuan per tonne.
Demand from top copper user China remained slack, and hopes for an increase in purchases were slim, given easing demand for exports of copper products, due to the economic slowdown in Europe, as well as weakness in domestic consumption, Standard Chartered metals analyst Judy Zhu said.
Official Chinese data showed home prices fell in February from January for a fifth consecutive month, and the government reiterated its commitment to measures to control the property market to cool speculation.
“In the last week copper prices have stabilized around $8,500 a tonne, but it’s really moving nowhere and facing strong overhead resistance,” Zhu said.
“Demand is starting to recover from last month’s previously low levels but consumers don’t expect any strong recovery this year – that’s the problem.”
China accounts for 40 percent of global refined copper demand.
Consumers are keeping low inventories and are reluctant to purchase any more material than they need immediately because of expectations prices will not rise much higher.
Reflecting an absence of near-term purchases, the negative price differential between London and Shanghai copper hit a 14-month low near $450 on Tuesday. Front-month Shanghai copper remains at a 400-yuan discount to third-month prices, having been at a premium late last year.
China’s arrivals of refined copper may rise this month, however, as importers scheduled more term shipments under 2012 contracts, traders said, and as the metal is used for financing purposes.
Investors are closely watching U.S. housing figures which will be released later on Tuesday for an indication about metal demand, Credit Suisse Private Banking said in a note.
“Market participants expect a moderate pick-up of activity from very low levels. This would be positive news for metals, as housing accounts for a sizeable share of metals demand,” it said.
Shares slipped on Tuesday, led by losses in Hong Kong and Shanghai on underwhelming corporate earnings, while the euro held near its highest level in a week on easing fears about wider damage to the financial system from Greece’s debt crisis.