Tue May 7, 2013 9:52am EDT
LONDON, May 7 (Reuters) - Copper dipped on Tuesday as investors nervously awaited economic data this week from top metals consumer China and on persistent concern about global metals demand despite a recent decline in copper inventories.
Chinese trade data will be released on Wednesday that is expected to show copper arrivals eased slightly in April.
Inflation numbers are due on Thursday and money supply and loan growth expected from Friday.
The copper market may have over-reacted on Friday when it soared by more than 6 percent after a strong U.S. jobs report helped fuel hopes that an improvement in the world's largest economy would spur global growth, a London trader said.
"We may have done a bit too much on Friday and now people are a bit wary about the Chinese data tomorrow," he said. "We really need to break through $7,400 to make more gains on the upside."
Copper touched a session peak of $7,374 on Tuesday, the highest in three weeks, but failed to sustain the higher levels and slipped into negative territory.
Three-month LME copper was down 0.6 percent at $7,221.50 a tonne by 1324 GMT. It has lost 14 percent since hitting $8,346 early February, the highest so far in 2013.
Last month, copper hit its lowest in a year and a half following weak growth data from China.
"The first quarter underperformance of Chinese growth has put many investors on the sidelines. Meanwhile, the new government is looking for long-term rather than short-term solutions," ANZ analysts said in a note.
"While we do expect Chinese demand to improve this quarter, the stronger seasonal demand profile may end up being lukewarm."
China is the world's top copper consumer, accounting for some 40 percent of overall consumption.
Its refined copper imports fell 36.7 percent from a year ago to 218,823 tonnes in March, but the steep fall in London copper prices in mid-April has opened the window for Chinese imports, with benchmark LME copper currently trading at a discount of about $39 to its Shanghai counterpart.
"Chinese metals apparent demand has outperformed expectations year to date. The near term could thus see bouts of short covering, but there are growing expectations that Chinese demand will weaken into the second half," said Macquarie in a note.
Still, some investors remained heartened by the decline in
copper stocks fall in both Shanghai and on the London Metal Exchange.
Latest data showed Shanghai stocks at 213,782 tonnes, their lowest since late February, while LME stocks are at 604,600, their lowest since early April, having hit their highest in nearly a decade in late April.
"We can expect copper closer to $8,000 a tonne this quarter. There's a lack of scrap especially in China, premiums have increased, there's a backwardation on Shanghai markets, things have tightened up because prices have been so low," said Societe Generale analyst Robin Bhar.
He added, however:"This is certainly not the start of a new bull run, it's just a corrective bounce."
