Copper dips to 18-month low after dim China growth data
Copper under $6,800 a tonne represents value -trader* China local copper premium hits 10-month high* Coming Up: Euro zone manufacturing flash PMI; 0758 GMT(Adds detail, updates prices)By Melanie BurtonSINGAPORE, April 23 (Reuters) - London copper fell to afresh year-and-a-half low on Tuesday after China’s firsteconomic report for the second quarter underscored fitful growthin its seasonally strongest period, fuelling demand concerns inthe world’s top metals consumer.Growth in China’s vast factory sector dipped in April as newexport orders shrank, a preliminary survey of factory managersshowed, suggesting the world’s second-largest economy stillfaces formidable global headwinds into the second quarter.Three-month copper on the London Metal Exchange fellto $6,762.25 a tonne, its lowest since October 2011 beforesnapping back to $6,848 a tonne by 0709 GMT, down 1.25 percenton the day. Copper closed last week down 5 percent for a loss of morethan 13 percent this year. The most-traded copper contract on the Shanghai FuturesExchange sank 1.31 percent to close at 49,080 yuan($7,900) a tonne, having earlier plumbed its lowest in almostthree years at 48,460 yuan a tonne. "The HSBC (PMI) is much lower than the market wasexpecting," said Natalie Rampolo of ANZ in Melbourne."All the indicators are pretty negative in terms of thedetail. It does appear to be following the official PMI trend,which is pointing to more of a tepid recovery in the secondquarter for China," she said.The flash HSBC Purchasing Managers’ Index for April fell to50.5 in April from 51.6 in March but was still stronger thanFebruary’s reading of 50.4. China’s official PMI is due May 1."It doesn’t bode well for copper prices. It will have anegative impact today. Having said that, we do find when pricesreach around $6,500 to $6,600, there is a floor, so we’ll seeincreased buying from China," Rampolo added.Metals got support from comments on Monday by EuropeanCentral Bank policymakers stressing falling inflation and poorgrowth prospects in the euro zone that suggest the ECB may beleaning towards a further cut in its main refinancing rate.LME zinc prices have failed to gather any upwardmomentum since falling to a 5-1/2-month low at $1,825 mid month."The problem for zinc is the same as that afflicting otherbase metals: current market fundamentals and macroeconomicforecasts are simply not strong enough to encourage forwardbuying," broker Triland said in a note. SPOT MARKET PREMIUMSThe premium for physical copper in China’s domestic market rose to the highest in ten months against the frontmonth ShFE futures contract, the latest data showed,reflecting increased appetite for spot metal, given its decline."I see value in copper below $6,800," a trader at a globaltrading house said. "(Copper) may fall in the short-term, but Ithink it is a buying opportunity for the medium-term rather thana time to put shorts in," he added.