Copper Traders Shrug Off China Growth Plan as Iron Ore Surges

More Pain Ahead for Commodities
  • China signals willingness to buttress economic growth
  • Futures jumped 7% last week on speculation of more stimulus

Copper traders shrugged off China’s pledge to shore up growth, avoiding the record climb that iron ore experienced.

China plans to accelerate the restructuring of its state-owned industries while still setting a weaker growth target for this year. Copper jumped last week to its biggest weekly gain in four years as traders anticipated the Asian nation would boost economic stimulus. Even as iron ore soared 19 percent on Monday, copper futures swung between gains and losses, ending up just 0.4 percent higher.

“I think that the market is absorbing and examining the statements that came out of there,” Michael Turek, head of base metals at BGC Partners in New York, said in an e-mail. “China’s policy plenary over the weekend suggested lower growth but higher stimulus.”

Copper futures for May delivery rose 0.4 percent to $2.2835 a pound at 1:14 p.m. on the Comex in New York. The metal climbed 7 percent last week, the biggest such gain since December 2011. On the London Metal Exchange, copper and zinc declined, while lead, tin, aluminum and nickel advanced.

The 14-day relative-strength index on LME copper climbed to 75.5 on Friday, above the level of 70 that suggests to some traders and analysts that prices may be poised to decline.

Premier Li Keqiang announced a 6.5 percent to 7 percent expansion goal Saturday, down from an objective of about 7 percent last year.

“While copper was rallying last week, key China metrics were flashing warning signs,” Dane Davis, an analyst at Barclays Plc, said in a note on Monday, citing higher inventories in warehouses monitored by the Shanghai bourse and weak demand. “This is a market outracing fundamentals, and investors should be cautious in going long at these levels."

  • The Bloomberg Americas Mining Index added 2.3 percent, heading for a fourth straight gain
  • Factory orders fell for a second month in Germany, the third-biggest copper user, a report showed Monday.
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