Published: Thursday, 3 May 2012 | 2:38 PM ET
NEW YORK/LONDON (Reuters) – Copper fell in moderate dealings on Thursday, on track for its first weekly loss in the past three, after a double-dose of soft data from the United States dented global growth prospects, already down on China’s slowdown and Europe’s spiraling debt crisis.
The pessimistic economic tone fed declines across the entire base metal complex, with losses in tin amounting to nearly 3 percent. Copper’s bullish supply-side fundamentals were brushed aside as sellers pressured it to a one-week low at the key $8,200 per tonne level — a firm area of technical support where the 200-day moving average lies.
Metals fell in sympathy with other growth sensitive assets like crude oil after the U.S. Institute for Supply Management (ISM) said its services sector index fell to 53.5 in April from 56.0 the month before.
“Today’s Services Index miss is just the latest in a series of weaker-than-expected economic reports from the U.S.,” said Adam Sarhan, chief executive of Sarhan Capital.
“This is leading investors to doubt the health and sustainability of the U.S. economy, especially if we get a downside event from China or Europe.”
London Metal Exchange (LME) three-month copper fell by $76 or 0.9 percent to end at $8,229 a tonne.
In New York, the July COMEX contract settled off 5.10 cents at $3.7360 per lb, near the bottom of its session range of $3.7275 and $3.7910.
COMEX copper volumes tipped 50,000 lots in late New York trade, more than a third below the 30-day average, according to preliminary data from Thomson Reuters.
Prices had rallied by more than 14 percent by early February and have since shed 5 percent, trimming the year’s gains to around 9 percent.
“There is still a whole host of uncertainties in the market. There are troubles in the euro zone, and with non-farm payrolls out of the U.S. tomorrow, there is a lot of scope for volatility in commodity markets,” said Societe Generale analyst Robin Bhar.
“The $8,200 level has been pretty solid support for copper. If it doesn’t hold above that, then it could be quite bearish because it would have broken some fairly influential support levels.”
Looking ahead to Friday’s data, nonfarm payrolls are expected to have added 170,000 jobs last month, according to a Reuters survey, after rising a meager 120,000 in March. The unemployment rate is seen holding at a three-year low at 8.2 percent.
The European Central Bank (ECB) held its main interest rate at 1.0 percent on Thursday as stubborn inflation offset pressure to loosen borrowing costs further to support the weak euro zone economy.
ECB President Mario Draghi, reflecting growing anxiety among Europeans about their economic plight, said growth should be at the heart of euro zone policy but it needed to go hand in hand with fiscal austerity.
In industry news, output at Chile’s giant Escondida copper mine, the world’s largest, has not been affected by a protest by a group of contract workers who blocked some roads to the deposit in a dispute over bonuses, majority owner BHP Billiton <BLT.L> said on Thursday.
Despite another large withdrawal of 3,750 tonnes of copper from LME warehouses and lower first-quarter production from Chilean miner Antofagasta <ANTO.L>, the cash to three-months backwardation continued to ease Thursday.
(Graphic: http://link.reuters.com/bem97s )
INDONESIA EXPORTS
Indonesia will impose an average 20 percent export duty on 14 mineral ore exports including copper, gold and tin from May 6, the country’s mining minister said on Thursday.
The tax, which has been expected in recent months, will not apply to coal, which will be ruled on separately, said Jero Wacik, leaving open the possibility of a future tax on shipments from the world’s largest thermal coal exporter.
However, nickel traders said even an export ban on nickel laterite ore may not have a major impact on the market, which is sinking under the weight of new mining projects coming on line and a slowdown in the stainless steel sector.
“I don’t believe it will make a great deal of difference to the amount of pig iron that is produced. What would make a difference is demand for the product,” an LME trader said.
Nickel ended off $10 at $17,275 a tonne.
Elsewhere, tin plunged $595 or 2.7 percent to close at $21,805 a tonne.
(Editing by Jane Baird and Sofina Mirza-Reid)