LONDON (Reuters) - Copper steadied on Tuesday as reports that top metals consumer China will fast-track infrastructure investments offset a firmer dollar and uncertainty about Europe’s ability to resolve its debt crisis.
Three-month copper on the London Metal Exchange touched a week-high of $7,816 a metric ton (1.1 ton) in the session, before easing to $7,741 in official rings from Monday’s $7,731 close.
One of the price supports for copper on Tuesday was a report in the state-backed China Securities Journal that Beijing will speed up approval of infrastructure investments to combat slowing growth and a sluggish property sector. Copper is used extensively in construction.
Premier Wen Jiabao has also called for additional efforts to support growth, signaling Beijing’s willingness to take action after recent data suggested the world’s No. 2 economy would slow further in the second quarter.
“I would have thought this would have been more bullish for the market. It shows that sentiment is not terribly bullish at the moment for the metals market,” said Standard Chartered analyst Dan Smith.
“You’ve got one potentially very bullish event set against continued worries about the outlook.”
The Organisation for Economic Co-operation and Development said on Tuesday China’s growth is likely to slow to 8.2 percent this year, its weakest in more than a decade.
The slowdown in its economy has already weighed particularly hard on the commodities market.
Copper is on track to lose more than 7.5 percent this month, sharply cutting its year-to-date gains to around 2 percent from as much as 15 percent in February.
Falling prices combined with escalating costs that have squeezed cash flow prompted big miners BHP Billiton (BHP.AX) (BLT.L) and Rio Tinto (RIO.AX) (RIO.L) to say they were reconsidering the pace of their long-term expansion plans.
Traders are also reluctant to take any strong positions ahead of any resolution for Greece, and the euro zone. Eyes are now on an informal summit of EU leaders in Brussels on Wednesday.
The debt crisis has deteriorated rapidly over the past month, with Greece’s potential exit from the 17-country currency bloc no longer taboo. Many economists and policymakers are arguing it would be one of the best ways of restoring market confidence.
A firmer dollar against a basket of currencies also put pressure on copper. A stronger dollar makes commodities priced in the unit more expensive for holders of other currencies.
But overall, copper fundamentals are expected to remain relatively tight over the year ahead, National Australia Bank said in a research note.
“Copper grade degradation, limited new capacity in the horizon and reasonably solid fundamentals for demand should support prices,” NAB said.
Tin was $19,500 in official rings from $19,250 while zinc, used in galvanizing, was $1,910 from $1,905 at Monday’s close.
Battery material lead was $1,940 from $1,941 and aluminum was $2,038 from $2,047. Nickel was $17,050 from $17,185.
Editing by Keiron Henderson