LONDON: Copper prices dipped on Friday as many investors questioned whether attempts by top metals consumer China to boost its economy would be effective.
Three-month copper on the London Metal Exchange (LME) fell 0.2% to $8,550 per metric ton by 1153 GMT. On a weekly basis, copper remained on track for its biggest gain in more than two months.
China’s central bank this week announced a deep cut in the amount of cash banks must hold as reserves and a Bloomberg report said Chinese authorities were considering mobilising about 2 trillion yuan to stabilise a slumping stock market.
A struggling property market and low consumer confidence might not be bolstered by the measures announced this week, said Julius Baer commodity analyst Carsten Menke.
“There is bearish sentiment across metals, with a challenging short-term outlook, as China is unlikely to find a secret to U-turn the economy,” Menke said.
Copper strides higher on hopes for more stimulus in China
Falls, however, were limited by weakness in the U.S. dollar, making metals cheaper for buyers using other currencies.
LME nickel gained 0.3% to $16,750 a ton, lead eased by 0.3% to $2,144, aluminium was up 0.4% at $2,248 and zinc advanced 0.5% to $2,593 while tin edged up by 0.2% to $26,695.
Global supplies of aluminium and nickel are sufficient while there will be shortfalls in output from copper mines, Menke said.
China’s top copper smelters, accounting for more than 75% of the country’s output, on Friday proposed to cut production because a lack of mined copper supply has led to a sharp decline in income and hurt margins.
“There is more than enough copper smelting capacity worldwide. Even if Chinese smelters are not buying copper concentrates, the rest of the world will,” Menke added.