Copper retreats as Chinese imports fall, manufacturing data

Copper futures retreated on Monday as market players weighed falling Chinese imports in August and talks on October Fed tapering against manufacturing data from China and the Euro zone.

On the Comex division of the New York Mercantile Exchange, copper futures for delivery in December fell by 0.74% to $3.296 per pound at 8:56 GMT. Prices held in range between days high and low of $3.312 and $3.265 a pound respectively. The industrial metal fell 1.4% on Friday, snapping three days of advances, but still settled the week 2.6% higher.

Copper was pressured on Friday as St. Louis Fed President James Bullard said that the Federal Reserve could still trim its monetary easing program in October if economic data lay support. “October is a live meeting,” he said for Bloomberg. “I’m not saying it’s going to happen, but the possibility exists.”

The metal extended its losses on Monday as Chinas General Administration of Customs reported that imports of refined copper declined by 10% in August to 262 942 tons compared to the preceding month, suggesting demand in the worlds top consumer may be weaker than expected.

Wu Jianguo, an analyst at Maike Futures Brokerage Co, said for Bloomberg: “Copper imports may fall further as consumption might be a bit disappointing in the second half.”

Losses however remained capped as upbeat data showed expansion in the manufacturing sectors of China and the Euro zone. The September reading of the HSBC Flash China Manufacturing PMI rose to a six-month high of 51.2 and surpassed analysts’ expectations for a surge to 50.9 after hitting 50.1 in August. At the same time, the Flash China Manufacturing Output Index jumped to a five-month high of 51.1 from 50.9 in August.

Hongbin Qu, Chief Economist, China & CoHead of Asian Economic Research at HSBC commented: “The HSBC Flash China Manufacturing PMI rose to a six-month high in September, adding further evidence to China’s ongoing growth rebound. The firmer footing was supported by simultaneous improvements of external and domestic demand conditions. We expect a more sustained recovery as the further filtering-through of fine-tuning measures should lift domestic demand. This will create more favourable conditions to push forward reforms, which should in turn boost mid- and long-term growth outlooks.”

Meanwhile, a separate report showed that Frances Advance Manufacturing PMI fell to 49.5, confounding analysts expectations for a surge to 50.1 from Augusts 49.7. Meanwhile, Germanys index stood at 51.3, slightly underperforming expectations for a surge to 52.0 from 51.8 in the previous month.

The Euro zones manufacturing output rose for a third month, although the pace was slower than Augusts 27-month high. The single currency blocs Advance Manufacturing PMI remained above the neutral level at 51.1 after hitting 51.4 in August. However, manufacturing has seen the strongest three months of growth since the second quarter of 2011.

Chris Williamson, Chief Economist at Markit said in the report: “An upturn in the Eurozone PMI in September rounds off the best quarter for over two years, and adds to growing signs that the region is recovering from the longest recession in its history. It is particularly encouraging to see the business situation improved across the region. Although the upturn continued to be led by Germany, France saw the first increase in business since early-2012 and elsewhere growth was the strongest since early-2011.”