London/Singapore - Copper was steady on Thursday after a 1 percent loss the previous session, as worries over China's credit crunch eased and on expectations that the US and EU central banks will not rush to reduce their stimulus programmes but oversupply concerns weighed on metals.
Benchmark copper on the London Metal Exchange was little changed, trading at $6,731 a tonne in official rings from $6,735 at the close on Wednesday.
The metal, used in power and construction, has lost almost 15 percent this year.
In top metals consumer China, stocks clawed back some of their recent heavy losses and cash markets steadied, but gains were capped by concerns that last week's severe cash crunch was ushering in a period of tougher funding conditions and slower economic growth.
Demand from China accounts for about 40 percent of global copper consumption.
“For industrial metals, China is in the driving seat and the story of the credit crunch is a bit of a problem,” Credit Suisse analyst Tobias Merath said.
“Today the situation has improved a bit but we don't expect any major rebound; we don't see the fundamentals for that, with liquidity problems in China, forward looking indicators not looking too well and a lot more supply coming in the metals markets.”
Copper was supported by a downward revision on Wednesday of US economic growth estimates for the first quarter, easing worries that the Federal Reserve might soon curb the massive monetary stimulus that has boosted commodity prices.
European Central Bank (ECB) president Mario Draghi reiterated on Wednesday that an ECB exit from its loose monetary policy remains distant, offering additional support for the markets.
In the longer term, copper is expected to remain under pressure from slowing growth in China and expectations of a bigger global surplus.
“We remain bearish on copper,” said Joyce Liu, an investment analyst at Phillip Futures in Singapore.
“The market was supported by talk of output disruptions, but now producers are ramping up supplies at a time when there is excess supply in the market.”
Freeport McMoRan Copper and Gold Inc is increasing up production at its Indonesian unit, a company spokeswoman said, six weeks after a deadly tunnel collapse at the world's No. 2 copper mine halted operations.
In other metals, three-month aluminium traded at $1,764 a tonne in rings, from $1,771 at Wednesday's close.
China has increased orders for spot shipments of aluminium in the past week as prices in the international market have fallen close to four-year lows, dipping below the price of locally produced metal.
Battery material lead traded at $2,042.50 from $2,031 while zinc , untraded in rings, was bid at $1,844.50 from $1,838 Wednesday's close.
Tin was unchanged at $19,700 and nickel traded at $13,720 from $13,605. - Reuters