China daily reported that copper drifted lower as recently investors looked past a weaker US dollar, worried that scant demand outside China would stall a run up that has more than doubled the metal's price this year.
The greenback's slump to 1 year lows against the euro which makes commodities cheaper for holders of other currencies, helped copper post modest gains earlier in the session before demand concerns weighed on sentiment.
Ms Yingxi Yu analyst at Barclays Capital said that "We are seeing early signs of demand picking up in the world outside China but I won't say that there is conclusive evidence that this is happening at a pace that is significant. Our view is copper is well supported but to drive the next leg of the rally, it's going to take much more than China and the dollar."
The dollar slid to a 1 year low against a basket of currencies while Asian stocks touched a 13 month top ahead of the US Federal Reserve's policy decision later in the day with its post meeting statement likely to take note of an improving economy.
3 month copper on the London Metal Exchange MCU3 fell USD 78 per tonne to USD 6,192 per tonne in early trade. LME copper rose as much as 3% on September before cutting gains to close at USD 6,270 per tonne up 1.3%.
Shanghai's benchmark 3rd month copper SCFc3 dropped CNY 430 to end at CNY 48,220 per tonne. China's apparent copper demand fell 13.9% in August from July, following a slide in imports by the world's top consumer of many base metals.
Analysts expected that the drop in Chinese copper imports after record purchases in the H1 but had anticipated demand elsewhere would pick up fast enough to offset the slack.
Ms Yu said that Chinese copper imports were likely to fall further from August's levels. That's potentially a downside risk to prices.”
