NEW YORK/LONDON (Reuters) - Copper retreated from a one-week high on Wednesday, hit by currency-related selling and concerns about an uncertain demand outlook from top-consumer China that worked to drag prices back toward the middle of a months-long trading range.
Copper tracked overnight losses in Asian markets. Shanghai shares sustained their biggest one-day loss this year after Premier Wen Jiabao doused expectations of any near-term easing of measures in the country’s property sector, a key consumer of the red metal.
The comments roiled growth-sensitive commodities like crude oil and industrial metals, which one day earlier were flying high on the back of better-than-expected U.S. retail sales data and a brighter economic outlook from the Federal Reserve.
“While the U.S. economy continues to improve, we are completely subject to global shocks,” said Sean McGillivray, vice president and head of asset allocation for Great Pacific Wealth Management in Oregon.
London Metal Exchange (LME) benchmark copper shed $100 to close at $8,460 a tonne, reversing from Tuesday’s one-week peak of $8,608.74.
In New York, the May COMEX contract fell by 5.45 cents, or 1.4 percent, to settle at $3.8480 per lb, near the bottom end of its $3.8335 to $3.9180 session range.
The loss dragged COMEX copper prices back toward the middle of a well-worn range this year, between $3.70 and $4.
“I could easily see it challenge the $3.70 area again,” McGillivray said.
“That’s an area where you could be looking to enter long. Near $4, you’d be looking at taking profits.”
Volumes remained relatively thin midway through the week. A little more than 48,700 lots traded in late New York trade, more than a third below the 30-day norm, according to preliminary Thomson Reuters data.
On Tuesday, Fed chairman Ben Bernanke acknowledged recent signs of strength in the U.S. economy, but squashed hopes of another round of quantitative easing.
“The key event this week is people scaling down expectations of quantitative easing. Bernanke’s speech yesterday made it less likely. The U.S. economy has been steadily recovering so they don’t need it now,” said Andrey Kryuchenkov, analyst at VTB.
In reaction, the dollar surged to a one-month high against the euro, making dollar-denominated assets like metals more expensive for non-U.S. investors.
Copper has gained more than 11 percent this year, partly buoyed by hopes demand from China, which consumes about 40 percent of global consumption, would pick up after the Lunar New Year, with recent inflation data boosting hopes policymakers could take further steps in easing monetary policy.
“Copper inventories are dwindling, canceled warrants are amazingly resilient and premiums are up in Europe, but you still need that fundamental Asian push which we have not seen yet,” Kryuchenkov said.
COMEX technicals: link.reuters.com/kyc27s
Shanghai copper stocks: link.reuters.com/gus66s
Global metal stocks: link.reuters.com/deg67n
Reuters metal production data base:
Heavy rains in northern Chile cut off roads at No. 3 copper mine Collahuasi (AAL.L) XTA.L and Cerro Colorado BHP.L, but operations have been little affected, worker and company sources said on Tuesday.
In other metals, tin futures shed $450 to end at $23,800 a tonne, following a rise of more than 3 percent on Tuesday. This after Indonesia’s Koba Tin began loading a 280-tonne shipment after demonstrators blocked the producer’s exports this week over a pay dispute.
Lead fell $52 to finish at $2,102 a tonne.
China’s consumption of refined lead has risen this month because of higher output of lead-acid batteries, manufacturers of which are the country’s top users of the metal. Industry sources see demand rising in the next three months.
A monthly bulletin from Lisbon-based International Lead and Zinc Study Group (ILZSG) showed the global lead market was in surplus by 9,700 tonnes in January, while the global market for zinc was in surplus by 22,400 tonnes in January.
Additional reporting by Silvia Antonioli; editing by Hans-Juergen Peters and Jim Marshall