Thursday, 01 Jul 2010
Reuters reported that London copper fell 3% while Shanghai copper was down nearly 2% dragged down by a firmer dollar and sharp falls in China's stock market amid worries about the economic recovery.

The Shanghai Composite SSEC fell more than 4% and broke below a near term support level, as investors pulled fund from the market to prepare for a major IPO by Agricultural Bank of China.

A Shanghai based trader said that it's the stock market that is dragging down the metals even though copper's fundamentals are not bad. Copper might move even lower in the short term.

Shanghai's benchmark third month copper futures contract SCFc3 fell 1.9% to close at CNY 52,940 per tonne retreating from a near one month high of CNY 54,490 in the previous session. 3 month copper on the London Metal Exchange CMCU3 fell to USD 6,675 per tonne by 0701 GMT down nearly 3%.

A Singapore based trader said that risk aversion is boiling to the surface. There are quite valid growth concerns around. Inflation concerns would prompt demand for metals leaving copper range bound between USD 6,000 and USD 7,000 in the short term. But some traders believe the pullback to be only temporary.

Traders said that we probably won't see a clear trend in the short term. But in a month or two, we are likely to see copper return to the territory of USD 7,300 to USD 7,500. There's a bright future but the path won't be straightforward.

(Sourced from Reuters)