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Copper treads water; global growth worries weigh

LONDON - Copper was largely flat on Wednesday, subdued by worries about a global slowdown following a weak start to the U.S. corporate earnings season and amid protracted sovereign debt problems in Europe, while traders awaited key economic data from top metals consumer China later this week.

LME copper edged up 0.4 percent to $7,520 a tonne in official trading. Prices have rebounded from six month lows of $7,233.25 a tonne hit one month ago, and are down one percent on the year.

“Markets are really quiet, there’s no conviction in any direction. Investors are very uncommitted and consumers are away from the market because summer trade has started,” analyst Stephen Briggs of BNP Paribas said.

“People are waiting for something concrete to happen in terms of the Fed, endless drama in Europe, and China’s GDP,” he added.

European shares fell on Wednesday after profit warnings from U.S. companies compounded fears the sluggish global economy will erode earnings, while scepticism over the euro zone’s ability to tackle its debt crisis pressured other risk assets.

With trade already thinned by Europe’s summer, where much of industry shutters for a long summer break, metals prices were at risk of falling further, if support from the euro failed to hold, traders said.

The euro held near two-year lows versus the dollar on Wednesday as it emerged there would be no quick resolution to a German court hearing on activating euro zone bailout funds, adding to unease over how policymakers will tackle the debt crisis.

A stronger dollar makes commodities more expensive for holders of other currencies.

June trade data from China this week stoked anxiety about the strength of domestic demand in the world’s second biggest economy as imports rose at only half the pace expected. Markets are now hoping that weak GDP numbers will herald another round of monetary easing and lift commodity prices

“RBS remains constructive towards commodities and we consider the current price weakness as an opportunity to gain commodity exposure before we expect prices to rally later in the year,” the bank said in a research note.

“Price induced producer cutbacks; a forecast seasonal commodity consumption recovery in Q4 and likely renewed monetary stimulus response in the U.S., Europe and China, are some of the factors that we believe will bolster commodity prices in the months ahead.”

Nickel nears year’s lows

Prices of LME nickel have fallen towards 2-1/2 year lows due to weakness in the stainless steel sector, for which nickel is a key material, and smooth exports of ore from Indonesia, which has been subject to a change in export regulations, BNP Paribas’s Briggs added.

“Nickel is weak, and one can probably cite developments out of Indonesia as a factor in that exports are getting back to normal. (Authorities) seem to be issuing exports for permits at massive levels. From now until 2014 at least there seems to be not much of a risk to nickel ore supply to China,” he added.

Indonesia has awarded mineral export permits to 15 nickel ore miners since it introduced curbs on such shipments in May, a trade ministry official said earlier this month after the restrictions triggered panic buying by customers in key buyers Japan and China. Nickel climbed 0.9 percent to $16,200 a tonne in official trading. Prices hit $15,980 on June 7, the lowest since Dec. 2009.

Tin added 0.1 percent to $18,795 a tonne in official rings while zinc, used in galvanizing, gained 0.5 percent to $1,839.

Battery material lead fell 0.3 percent to $1,868.50 a tonne in official trading and aluminium also shed 0.3 percent to $1,907.