(15/04) Copper up, China demand concerns cap gains

April 15, 2011
Copper edged up on Friday, clawing back some ground after four straight session of losses, with gains capped by worries Chinese inflation at a 32-month high would lead to tighter monetary policy and hit demand.

Chinese consumer price inflation sped to 5.4 percent in the year to March, the fastest since July 2008 and topping market forecasts for a 5.2 percent increase. Gross domestic product eased a touch in the world's top copper buyer.

Copper for three-months delivery on the London Metal Exchange (LME) was at $9,431 a tonne in rings, from Thursday's close of $9,410.

"The market is gradually getting a little bit more worried about what Chinese growth is going to look like over the medium term because of the ongoing tightening," Jesper Dannesboe, senior commodity strategist at Societe Generale, said.

"Growth is going to slow down quite significantly, it's going to be very bumpy."

China's production of refined copper and primary aluminium rose 23.7 percent and 7.4 percent respectively from a year earlier in March, hitting monthly records for both metals on expanded capacity and sufficient supply of raw materials.

Copper inventories at LME warehouses fell 375 tonnes to 450,425 tonnes on Thursday, little respite in an upward trend that has seen stocks of the metal used in power and construction climb by a fifth so far this year.