METALS-Copper falls on euro zone disappointment, China worry, house prices rise in July, inflation curbs seen
- Euro falls to session low, dollar recoups losses
- Copper open interest at multi-year lows …
By Susan Thomas LONDON, Aug 20 (Reuters)
Copper fell on Monday on disappointment over a lack of progress in solving the euro zone crisis and fears that top commodities consumer China will step up a campaign to curb inflation in the metals-intensive
housing sector. Comments from German Chancellor Angela Merkel, supporting European Central Bank efforts to address the euro zone crisis, had helped lift risk sentiment on Friday, boosting prices of base metals.
But any optimism that flowed from those remarks soon faded as euro zone leaders failed to follow up with any concrete plans at the weekend.
In China, the world’s top consumer of copper, home prices ticked up in July from June, a second month of modest rises that raised the risk Beijing may seek
to ratchet up a two-year campaign to curb housing inflation. Commodities markets were also disappointed that China, which accounts for 40
percent of the world’s copper demand, held off on much hoped for monetary easing last weekend.
“The focus of the market is back on Europe and China,” said Standard Bank analyst Leon Westgate.
“The housing data on the surface suggests that property controls are going to continue. In Europe, we’ve got a week of shuttle diplomacy and a lot of talking but not much action.”
Three-month copper on the London Metal Exchange was $7,450 per tonne in official rings, from $7,539 at the close on Friday, when it rose 1.2 percent.
Copper open interest , or contracts that are ‘live’ – having not yet come to expiry or closed out – is languishing at the lowest level in around five years. Volumes were slim, with around at 5,403 lots of copper changing hands.
LME copper, which has dropped more than 27 percent from a record of $10,190 in February 2011, has been stuck in a narrow trading range between $7,300 and
$7,600 since July 20. To break out of the range, “you really need something to entice the guys on
the sidelines to come in. What you needs is a significant improvement or deterioration”, Westgate said. “At the moment it’s status quo, drifting along.”
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Category: Crude Oil, Energy, and Gold Futures