Copper price drops as uncertainty surrounds stimulus in China

The copper price fell on Monday as a lack of detail on economic stimulus in China and a firmer dollar reinforced expectations of weak demand.

Copper for delivery in July was down 0.55% on the Comex market in New York, touching $3.86 per pound ($8,492 per tonne). 

Click here for an interactive chart of copper prices.

“Copper is reacting to the lack of anything definitive on stimulus from China,” one metals trader said, adding that volumes were thin and likely to remain so on Monday because of a public holiday in the United States.

“The higher dollar isn’t helping and we are in a seasonally slow period for industrial metals demand.”

A stronger US currency makes dollar-priced metals more expensive for holders of other currencies, which could undermine consumption.

However, traders said expectations that China will cut benchmark rates on Tuesday, the first such easing in 10 months, will help to shore up sentiment in industrial metals markets.

Providing some support for copper are falling stocks in warehouses monitored by the Shanghai Futures Exchange, which have dropped 76% to 61,090 tonnes since February 24.

Traders are also watching copper stocks in LME-approved warehouses, where canceled warrants — metal earmarked for delivery — amount to 37% of total stocks of 88,425 tonnes.

(With files from Reuters)