Copper inched down on Monday as investors remained cautious over continuing uncertainty about the debt crisis in Greece and U.S. monetary policy.
Benchmark copper on the London Metal Exchange slipped 0.22 percent to $9,025 a tonne by 11:35 SA time, from $9,050 a tonne at the close on Friday.
The red metal used in power and construction fell by more than 11 percent since it hit a record high at $10,190 per tonne on Feb.15.
“Uncertainty over the U.S. monetary policy and uncertainty over the Euro zone debt crisis is enough to keep markets cautious,” said Credit Agricole analyst Robin Bhar.
The Federal Reserve cut its forecasts for U.S. economic growth last week, but offered no hint of further monetary support, saying the recovery should gradually pick up heading into 2012.
U.S. Federal Reserve Chairman Ben Bernanke is set to deliver semi-annual testimony to Congress on the economy and monetary policy July 13.
In Europe, Greece's parliament begins on Monday to debate a deeply unpopular austerity plan which international lenders are demanding to see approved this week to avert the threat of bankruptcy.
“Lending money to Greece doesn't solve the fundamental problem that they are broke but markets may be reasonably happy with that in the short term,” Bhar said.
A softer dollar was capping losses.
A softer U.S. currency makes dollar-priced commodities more affordable for holders of other currencies.
SLOWING DEMAND
Fears over the effects of tightening in top metals consumer China was also weighing on the metal.
Societe Generale suggested investors to sell copper during the summer as prices could fall on the back of any economic slowdown in China.
“Copper-consuming sectors are very sensitive to economic cycles and therefore copper prices are tightly correlated to the global economic trends,” Societe General said in a note.
“The Chinese slowdown was confirmed over the last couple of weeks with the country's growth prospects reduced to single digits in 2011 weighted by its anti-inflation campaign and weaker global demand.”
Inventories of copper in LME warehouses fell 3,175 tonnes to 470,525 tonnes, but were still about 35 percent higher than in December last year.
“Cancelled warrants have gone up but we shouldn't read too much into it as maybe metal is coming out of a wareouse to go into another,” Robin Bhar said.
“As we head towards the summer slowdown we shouldn't expect any hefty increase in cancelled warrants.”
Aluminium was at $2,507 from $2,500 while zinc, used in galvanizing steel was at $2,251 from $2,254 Friday's close.
Battery material lead was at $2,567 from $2,580 and tin was at $25,040 from$24,925. Nickel was at $22,079 from $22,150. - Reuters