China industry slowdown puts dents in copper

COPPER ended with marginal losses overnight after dropping to its lowest level in more than a week.

A rise in inventories and gloomy data on China's industrial activity continued to cloud the metal's demand outlook.

A 2 per cent rally on Wall Street pulled the red metal away from its session lows after data showed that US retail sales fell only slightly in February.

Copper for May delivery on the New York Mercantile Exchange's COMEX division eased US0.10 cent to settle at $US1.6245 a pound, after sinking to a session low of $US1.5850, its lowest since March 3.

Last week, the benchmark May contract hit a three-month high of $US1.7370.

China's growth in annual industrial output slowed to a record low 3.8 per cent in January and February, from 5.7 per cent in December.

Richard Knights, an analyst at Numis Securities, said of the data: ¡°It's pretty bad. That would certainly be below expectations.

LME stocks of copper rose 2450 tonnes to 504,325 to reverse recent declines. Cancelled warrants for copper - material earmarked to leave LME warehouses - fell to 37,175 tonnes from 40,825 tonnes.

The proportion of cancelled warrants has fallen to 8 per cent of the total stock, down from 12 per cent last week, suggesting the exodus of material may soon slow.

Said Stephen Briggs, analyst at RBS Global Banking & Markets: ¡°That big story of last week and the week before has gone into reverse. That upwards-driver has slightly diminished.¡±

The demand outlook for other metals was not positive either.

Stocks of aluminium, used in transport and packaging, rose 3250 tonnes to nearly 3.3 million tonnes. Prices of the metal have been hammered by deteriorating vehicle sales and bleak prospects for the industry.

Aluminium was unchanged from $US1340 on Wednesday. Greater losses were capped by the Chinese data, which showed primary aluminium output fell 18.2 per cent from a year before to a two-year low of 894,000 tonnes in February.

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