London Metal Exchange copper fell in early Asian trading on Monday April 16 as the market continued to absorb the news of China’s slow economic growth.
By 02:22 London time, three-month copper was at $7,934.5, down $40.75 from its open. The contract traded between $7,978.25 and $7,915 per tonne.
“The latest Chinese data is worse than expected, hitting on a market that is already weak due to pale fundamentals, as inventory has been high and demand has been sluggish,” an analyst in Shanghai said.
China announced on Friday that its economy grew by 8.1% year-on-year in the first quarter. The growth was the slowest since the first quarter of 2009, when the gross domestic product rose by 6.6%.
Moreover, the National Bureau of Statistics (NBS) reported over the weekend that March power consumption rose by 7% year-on-year. The growth was 6 percentage points less than the same period last year, showing a slowdown in the local economy.
Also in the spotlight, China widened the trading range for yuan exchange rate over the weekend.
“This may indicate that the chances are getting smaller for the yuan to sharply appreciate, but more likely to depreciate,” a Shenzhen analyst said.
But analysts predict that sharp falls in prices will be unlikely, and they expect the three-month LME copper to find support at $7,800 per tonne.
“It is likely that the Chinese government to come up with more easing policies, and expectation is on the rise that the Chinese economy may bottom out in the second quarter,” the Shanghai analyst said.
The Chinese central bank, for example, reportedly lowered the bank deposit reserve requirement ratio on Friday by 1 percentage point to some county-level financial institutions.
On the Changjiang Nonferrous Market, copper was down 1,230 yuan ($194) at 56,750-56,850 yuan for the session.
Shanghai Futures Exchange June copper opened at 56,800 yuan per tonne on Monday, down 2.1% from last session.
Other base metals were mixed in morning trading.
Three-month aluminium was up 0.3% from its open at $2,078.5 per tonne, lead was down 0.7% at $2,043, and zinc was up 0.2% at $1,990 per tonne.
Nickel lost 1% from its open at $18,050 per tonne, and tin was 0.5% lower at $22,094 per tonne.