Copper futures weighed down by US home sales data, demand concerns

Copper futures in Shanghai fell on Friday due to weak US home sales and declining demand from China.

The most-traded copper contract for April on the Shanghai Futures Exchange (SHFE) closed at 39,090 yuan ($6,254.40) per ton, down 230 yuan from Thursday. The trading volume increased by 45,304 lots Friday from the previous trading session's 602,624 lots.

The contract's price was down 1,660 yuan, or 4.07 percent, compared to the previous Friday, January 23.

"Base metals were weaker. Disappointing home sales data in the US combined with weak Chinese demand created headwinds for industrial metals," said a research note sent to the Global Times Friday by the Australia and New Zealand Banking Group (ANZ).

An index for US pending home sales fell 3.7 percent month-on-month in December, following a 0.6 percent increase in November, the note from ANZ said.

Meanwhile, broader macroeconomic uncertainties such as the slump in oil prices also dragged on copper prices, rather than copper's own fundamentals, according to a report by Reuters Thursday, citing Joel Crane, an analyst at Morgan Stanley in Melbourne.

"In six and 12 months we'll see copper prices higher," the report quoted Crane as saying.

There has been speculation that China's State Reserves Bureau will purchase at least 200,000 tons of copper in 2015 in order to stabilize the market, Reuters reported, citing anonymous sources.

However, the news failed to boost Friday's market sentiment.

Some analysts said traders were waiting for economic data from China, the largest copper consumer in the world, for more trading cues.

China's official Purchasing Managers' Index (PMI) fell to 49.8 in January, down from 50.1 in December and the lowest level in 28 months, according to data released by the National Bureau of Statistics on Sunday. A reading below 50 indicates contraction, and the data was seen as an indicator of continuing pressure on the economy.