Copper is trading at 332 cents per pound, pushed into decline by an overnight report which broke the news that lending in China had fallen on the month for December, coming in below expectations. The data from Beijing showed that lending by state-controlled banks dropped to 482.5 billion yuan in December, from 624.6 billion yuan in November. Bank lending increased by 8% in 2013, and this compares with a 10% increase in 2012.
The decline in the rate of lending has hit copper, as China accounts for almost 40% of copper consumption. If businesses can’t get access to cash, we could see the red metal extend its decline.
Tonight, at 7pm (London time), the US will reveal the beige book update. During the week, Dennis Lockart of the Federal Reserve expressed his support for a continued reduction in the stimulus package, as he feels the US economy is improving. The US dollar is higher against most major currencies ahead of the beige book announcement. If the report is positive we could see the US dollar strengthen, giving copper a further push into its slide.