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Copper prices resumed their downward path on Wednesday, weighed down by a stronger dollar and more bad news from China's property sector, a major user of industrial metals. Three-month copper on the London Metal Exchange was down 0.4% at $8,439 a metric tonne by 1035 GMT. LME copper had edged higher on Tuesday after two days of losses.
Chinese developer Country Garden on Wednesday said that a liquidation petition has been filed against it, undermining Beijing's efforts to restore confidence in a property sector that accounts for a quarter of China's GDP. "Some of the growth in China in recent years has been built on a shaky foundation and now they're suffering the consequences," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
"The government cannot afford an economic downturn, so the prospect for stimulus is still lurking in the background, but copper trading has become increasingly frustrating." Positioning data from exchanges showed that, on the whole, speculators were being caught out by the volatile market, he added.
"It's highlighting that speculators continue to buy at highs and sell at the lows, not really getting it right," Hansen said. On the Shanghai Futures Exchange (SHFE), the most-traded April copper contract SCFcv1 dipped 0.1% to 68,760 yuan ($9,551.06) a tonne.
Copper inventories in SHFE warehouses more than doubled in a little more than two weeks to 181,323 tonnes, data showed on Friday. That is the highest level since last March, suggesting that Chinese demand has not made much of a recovery since the Lunar New Year holiday.
"The pace of consumption rebound after year-end is slightly slower than usual, but it will still be a month-on-month recovery," broker Jinrui Futures said in a note. The dollar index =USD firmed as markets awaited global inflation data for clues on when central banks will start easing policy. A stronger US currency makes dollar-priced metals more expensive for buyers using other currencies.
Among other metals, LME aluminium CMAL3 dipped 0.4% to $2,183 a tonne, nickel CMNI3 fell 0.6% to $17,355, zinc CMZN3 shed 1.1% to $2,395, lead CMPB3 slipped by 0.4% to $2,082 and tin CMSN3 was little changed at $26,370.
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