Singapore 23/05/2016 - Copper on the Shanghai Futures Exchange fell on Monday morning as the market stayed bearish amid a lack of positive factors to support prices.
The most active SHFE July copper contract slipped 160 yuan to 35,160 yuan on Monday, with around 270,000 lots changing hands so far. Open interest was at about 303,000 positions, up from 300,324 positions at Friday’s close.
“We are bearish on copper. There is a lack of positive factors to lift copper at the moment and we believe there is still room for decline in the near-term,” said a Shanghai-based futures trader.
Base metal prices are also under pressure with the peak demand period of April-May coming to an end and demand starts to slow during the summer lull, added the trader.
In data, final April copper trade data released by the Chinese customs on Saturday showed China's unwrought copper and copper alloy imports rising 6.3 percent year-on-year but falling 24.5 percent month-on-month to 400,000 tonnes in April.
Preliminary import data released earlier in May had showed overall copper metal and copper product imports falling 21.8 percent month-on-month in April.
Macroeconomic conditions are weighing on the red metal with lingering concerns over the Chinese economy returning to the forefront after disappointing data.
“We are not bearish on China per se but perhaps the market needs economic data to improve before it gets bullish again,” said William Adams, head of research at FastMarkets.
The increased probability of the US lifting interest rate soon is also pressuring base metal prices, added a Shanghai-based metals analyst.
The US Federal Open Market Committee’s (FOMC) April minutes released last Wednesday had turned out more hawkish than expected as it showed that the US policy-board is prepared to raise nominal interest rates as soon as June.
This supported the US dollar, with the US dollar index staying at above 95 since. The index was last at 95.19, down 0.11 percent so far on Monday.
Market participants currently see a 26 percent chance of a June rate hike, though the majority 53 percent reckoned this could happen in July, according to the CME Group FedWatch.
Benchmark crude oil prices weakened so far on Monday. The Brent crude spot price was last at $48.57 per barrel, down 0.45 percent, and the Texas light sweet crude dipped 0.66 percent to $48.13.
In data released Friday, US existing home sales in April came in at 5.45 million, above the forecast of 5.40 million.
Other data due later on Monday includes flash manufacturing purchasing managers index (PMI) from the US, EU, France and Germany.
In equities, the Shanghai Composite rose 0.56 percent to 2,841.24 so far on Monday.
In other metals, the September SHFE nickel contract was last at 67,360 yuan, down 1,160 yuan, with around 565,000 lots changing hands so far on Friday.
The SHFE July aluminium contract decreased 60 yuan to 12,375 yuan, and the SHFE zinc contract for July delivery dipped 125 yuan to 14,885 yuan.
The July lead contract fell 25 yuan to 12,770 yuan, while the tin contract for September delivery slipped 790 yuan to 106,360 yuan.
On the London Metal Exchange, base metals were mixed during Asian trading hours on Monday on Select. Copper was last at $4,570, down $8 from Friday’s close, with around 1,400 lots changing hands so far.
Aluminium rose $2 to $1,549, while nickel decreased $45 to $8,455. Zinc eased $6 to $1,860, while lead rose $1 to $1,687.50. Tin was up $10 to $16,460.
(Additional reporting by Dalton Barker)