MELBOURNE, April 21 (Reuters) - London
copper
inched higher on Tuesday but was below four-week highs hit in the previous session as the initial positive impact of a cut in China's bank reserve requirements was eclipsed by renewed worries over its beleaguered property sector.
China's weekend stimulus was targeted to support its service sector rather than commodity-intensive industries, and falling land sales flag a potential slowdown in construction in the second half that could drag on metals demand, said analyst Lachlan Shaw of UBS in Melbourne.
"It does give us a little bit more comfort in terms of infrastructure spending lifting this year, but ... it won’t allay a retrenchment under way in property construction,' he said, forecasting commodity demand would be flat to lower this year.
Three-month copper on the London Metal Exchange edged up 0.3 percent to $6,000 a tonne by 0200 GMT. It lost 1.2 percent on Monday after hitting a four-week high of $6,173.
Reflecting better supplies of metal, the premium for benchmark copper has weakened against the front month contract to $5.75, close to the lowest since last August, on expectations of higher inventories and index funds rolling over contracts.
The most traded June copper contract on the Shanghai Futures Exchange fell 0.9 percent to 43,400 yuan ($6,998) a tonne.
Property speculation has been a driving force behind China's copper imports in the past few years when metal was held as collateral for loans. Property bankruptcies raise jitters that copper stocks may be sold to recoup costs.
Troubled Kaisa Group <1638.HK> on Monday became the first Chinese property developer to default on its dollar bonds when it confirmed it had failed to pay a coupon on two senior notes.
Holders of aluminium inventories also faced more pain. As well as grappling with sliding premiums, the cost of holding aluminium for a day ballooned to $9 while the cash to three month spread jumped to $19.25 this week, the most expensive since December.
Premiums, or delivery surcharges, for physical aluminium in Europe have spiralled down by nearly half, raising the prospect of losses for buyers, although it is good news for industrial consumers such as beer can makers.
