Copper prices in London fell on Tuesday on short-covering after prices rallied in the previous sessions, while demand concerns remained in top consumer China.
Three-month copper on the London Metal Exchange fell 0.5% to $9,210 per metric ton by 0552 GMT, while the most-traded September copper contract on the Shanghai Futures Exchange advanced 0.2% to 73,800 yuan ($10,325.43) a ton.
“The recent price increase is from short-covering,” said Hong Kong-based analyst Matt Huang at broker BANDS Financial, referring to bearish copper position holders having to close their positions when prices rise to tame losses.
September open interest for copper has dropped to 67,000 lots from 107,000 lots a week ago, while December contracts only increased by less than 10,000 lots, suggesting there is little contract rollover, according to Huang. “(We are) not seeing any new long positions opened.
The market needs to see stronger signs of demand recovery in China,“ Huang added.
Chinese physical copper demand has improved slightly in the past few weeks, as prices fell 4.4% in June and 3.9% in July.
But a strong consumption rebound is still uncertain amid slowing economic growth and troubles in the country’s property sector.
A strike at Escondida, the world’s biggest copper mine, was also averted, easing supply concerns and pressuring copper prices.
The LME cash copper contract traded at a discount of over $100 a ton to the three-month contract, indicating abundant near-term supply.
China demand hopes, lower dollar lift copper prices
LME aluminium declined 0.5% to $2,433.50 a ton, nickel fell 0.4% to $16,600, zinc eased 0.3% to $2,779, tin dropped 0.8% to $32,300 and lead was down 0.2% at $2,036.
SHFE aluminium rose 0.9% to 19,650 yuan a ton, nickel increased 0.6% to 129,610 yuan, tin advanced 0.2% to 263,120 yuan while zinc fell 0.3% to 23,215 yuan and lead declined 0.4% to 17,590 yuan.
Source: Brecorder
