Wednesday, 18 March 2015 11:44
MELBOURNE: London copper edged up on Wednesday on expectations of tighter supply, but was braced for further dollar strength ahead of a Federal Reserve meeting that could yield clues on the timing of a US interest rate hike.
China consumer demand remains tepid a month after Lunar New Year, while smelters are producing ample supply. But several miners have cut supply forecasts, which is expected to impact refining capacity later in the year, underpinning prices.
“I haven’t been hearing lots of reports of demand after Lunar New Year – the market is very quiet right now. It seems this year will be another slow year,” said analyst Judy Zhu of Standard Chartered in Shanghai.
Construction has been one weak area for copper demand. Average new home prices in China’s 70 major cities fell for the sixth consecutive month in February from a year earlier, down 5.7 percent.
Three-month copper on the London Metal Exchange had edged up 0.3 percent to $ 5,787 a tonne by 0213 GMT, paring 1-percent losses from the previous session.
“Demand is weak – we certainly haven’t seen any strong consumer demand in Asia,” said a trader at a bank in Singapore.
The most-traded May copper contract on the Shanghai Futures Exchange slipped 0.7 percent to 42,340 yuan ($ 6,764) a tonne. Prices touched their lowest in four sessions.
Soft demand was evident in ShFE spreads for copper and zinc, where cash prices have traded below three-month prices this week, while premiums for copper stock in Shanghai bond fell $ 2 to $ 88.
Boosting supply risks, Codelco, the world’s biggest copper producer, said on Tuesday it was still working to get a key production unit at its newest mine running at capacity, following a delayed and problematic start-up process.
Fed officials, who started a two-day policy meeting on Tuesday, are expected to drop the phrase “patient” from their so-called forward guidance on interest rates, raising prospects of a June to September rate hike.
US housing starts plunged to their weakest level in a year in February likely as harsh weather kept building crews at home, in the latest indication that the economy hit a soft patch in the first quarter.
Copyright Reuters, 2015
