China’s imports slumped for an 11th month, extending the longest losing streak in six years, customs data showed Tuesday.
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This weighed on the market, although monthly copper imports rose by a third to a 20-month high as price differentials and more shipments ahead of last week’s holiday in China boosted trade. The rally in the stock was on the back of reports that the company had decided on slashing its zinc production by a third and cutting jobs in response to the sharp decline in commodity prices over the past year.
“The growth in demand for copper in September was strong, but it could be driven by speculative factors, caused by low prices”, said Sergey Donskoy, a Moscow-based analyst at Societe Generale.
“On Chinese copper demand, domestic wire and cable orders have picked up in September, leading to steady bonded inventory draws”.
With output cuts announced by Glencore Plc, Freeport-McMoRan Inc. and other producers signaling tighter supplies, the metal has posted two straight weekly gains for the first time in more than three months.
The overall sentiment in metals suddenly turned bullish after Glencore said recently that it was suspending a few operations at its Katanga mining unit in Congo and the Mopani copper mines in Zambia. But overall, analysts expect demand growth to remain suppressed.
“We do not think we are going to see this hard landing in China but we are expecting a structural slowdown in growth rates”, said Carsten Menke, analyst at Julius Baer. The nation’s slowing demand for commodities has broadsided the world’s biggest metal producers and trading houses, who have been forced to cut output, reduce costs and restrict future investment.
According to the newspaper, Rio’s head of copper and coal, Jean-Sebastien Jacques, said the current copper price was not an accurate reflection of the metal’s “fundamentals”, but it would be illogical for Rio, which has low-priced assets, to cut production. The upsurge continued on Monday with the metal recording a 1.8 per cent jump in early trade to $1,881.5 a tonne, before declining a bit to $1,870 a tonne on profit booking. Zinc gained the most with the rise of 9.74 percent followed by Nickel (6.36 percent), Lead (6.24 percent), Aluminim (3.54 percent) and Copper (3.08 percent) at the London Metal Exchange(LME). Three-month aluminium closed unchanged at $1,594 a tonne.
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Codelco will offer its customers in Europe premiums of $92 per tonne in 2016, down 18 percent from $112 this year, reflecting weaker market conditions. The metal soared 10 percent on Friday in its largest single-day gain in at least a decade following the Glencore supply cuts.
