Weak euro adds to pressure on metals

Singapore: Shanghai copper fell to its lowest level in more than nine months on Monday, pressured by a weak euro and new measures to douse China’s red hot property sector, while the London Metal Exchange was closed, draining liquidity from the market.

The most-traded July copper contract on the Shanghai Futures Exchange fell more than 2 per cent to 53,600 yuan ($8,600) a tonne, its lowest since June 27, before closing at 53,740 a tonne.

Lead also dropped, to its lowest since late September 2011 at 14,375 yuan a tonne, although ShFE aluminium and zinc both held above recent lows.

“Given demand is picking up and inventory is falling, I would say it’s macro-related. I think the main reason is the strong dollar,” said metals analyst Wan Ling of consultancy CRU in Beijing.

“The white good sector is quite strong. Power cables are better than last year.”

China is the world’s top consumer of copper, accounting for 40 per cent of refined demand.

Stronger domestic appetite helped China’s factory activity rebound in March, with new orders up sharply in a sign that the underlying economic recovery is strong enough to weather any risks from patchy export performance, surveys showed on Monday.

But the euro sagged, approaching a four-month low on concerns about spillover from the terms on the Cyprus bailout.

Also adding to safe-have demand for the US currency, North Korea put its missile units on standby on Friday to attack US military bases in South Korea and the Pacific, after the United States flew two nuclear-capable stealth bombers over the Korean peninsula in a rare show of force.

Asian shares were steady on Monday, but trading remained subdued with some Asian markets, including Australia and Hong Kong, and Europe still closed for Easter holidays.

London Metal Exchange markets closed on Friday and will remain shut on Monday.

Property sector

Also hurting sentiment towards metals were fresh curbs on China’s red hot property sector, traders said, although they were less stringent than feared.

Property speculators typically make up a large percentage of copper’s import demand as they import metal, sell it on the domestic market and use the proceeds for higher yielding investments.

Beijing, Shanghai and another major city in China’s southwest will implement strict property cooling measures as part of a central government crackdown on the overheated property market, state news agency Xinhua has said.

Reflecting some bargain hunting, the premium for front month copper on ShFE ended at 110 against the rolling third month, close to its highest since late October.