“The general absence of the USA for the Thanksgiving holiday at the end of the week could well give some of the very bearish Chinese funds the excuse to sell into the market once more”, Freeman said. That has strengthened the dollar and made metals more expensive for buyers using other currencies.
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Copper prices moved down by 1.72% to Rs 295 per kg in futures trade today as speculators trimmed their exposure amid a weak trend overseas and low demand at spot markets.
Nickel jumped 6 percent in Shanghai on Wednesday, leading a rebound in Chinese base metals, amid talk that producers may trim output as prices hit multi-year lows this week.
Deutsche Bank reckons that the world’s top 20 copper mining companies will produce 7 percent more ore this year than they did in 2000.
An economic and manufacturing slowdown in China, which accounts for about half of global copper consumption estimated at around 23 million tonnes, has seen demand growth rates slide this year. “Everyone still wants to maintain cash flow at these prices”.
Like Saudi Arabia, Codelco is among the lowest cost producers in its market and so a strategy of letting other higher-cost producers take the pain is a reasonable one from its own perspective, but it probably signals an extended period of low prices for everyone as the higher-cost producers hold out for as long as they can. The state-controlled metals industry body, China Nonferrous Metals Industry Association, proposed on Monday that the government scoop up aluminium, nickel and minor metals including cobalt and indium, an official at the association and two industry sources with direct knowledge of the matter said. There’s no guarantee that they’ll agree on action, the people said.
“Further price weakness ahead seems likely, ” she said, noting that funds were selling copper because of signs of poor demand, such as sluggish sales of air conditioners and property. A refusal could actually be bullish as it could force cutbacks.
LME nickel tumbled to close at $US8,735 a tonne, down 2.4 per cent and its weakest since July 2003. Lead rose 0.5 per cent to finish at $US1,594 a tonne while tin was barely changed, edging down 0.03 per cent to $US14,645.
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