The most-traded May copper contract stood at 48,370 yuan ($7,119) per tonne as at 11.12am Shanghai time, down by 1.2% or 570 yuan per tonne from a close of 48,940 yuan per tonne on Friday.
The sell-off in the dollar following the more dovish than expected rhetoric from the Federal Open Market Committee on March 20 has proved short-lived with the US currency recovering late last week.
The dollar index, at 96.58 as at 11.14am Shanghai time, is in relative high ground compared with the low of 95.74 reached on March 20. The index had hit a high of 96.81 last Friday.
Meanwhile, disappointing data released at the end of last week continue to fuel concerns about weakening global economic growth and dampened investors’ appetite for commodities.
Flash purchasing managers’ index (PMI) data from Europe and the United States last Friday were broadly weak – see data section below.
“The US’ March Markit manufacturing PMI was lower than the market had expected, meanwhile investors also saw a softening of the manufacturing sector in the Eurozone. The dollar index has also risen quickly,” Chinese brokerage Guotai Junan Futures said in a morning note.
“From a fundamental perspective, spot inventories have risen, which has added to the bearish sentiment,” Guotai Junan Futures added, pointing out that red metal prices are vulnerable to further downswings.
– The most-traded May lead contract was the second-worst performer on the SHFE this morning, dropping by 180 yuan per tonne or 1.1% to 16,800 yuan per tonne as at 11.12am Shanghai time.
– Weak demand for lead and rising inventories in China are pressuring prices.
– Deliverable lead stocks at SHFE warehouses rose by 1,884 tonnes to 35,326 tonnes in the week ended March 22.
– Stocks for lead’s sister metal zinc fell sharply last week amid concerns over supply of upstream zinc concentrate; SHFE zinc stocks fell by 6.5% or 8,064 tonnes to 115,974 tonnes in the week ended March 22.
– In data last Friday, the European Union’s flash services PMI for March dipped to 52.7 from 52.8 previously, while its flash manufacturing PMI was worse, falling to 47.6 from 49.3 previously.
– Germany’s flash manufacturing PMI plunged to 44.7 in March from 47.6 previously. It marked the lowest reading since 2012.
– In the US, the flash services PMI was down to 54.8 in March, down from 56 previously, while flash manufacturing PMI over the same period also disappointed at 52.5, down from 53 previously.