Wednesday, 11 March 2015 20:36
LONDON: Copper prices firmed on Wednesday as some bearish investors closed out positions due to concerns over mine output, but gains were capped by a strong dollar and weak Chinese data.
Speculators pushed the market down this week when copper touched the weakest levels in two weeks, but some are giving up now that the move stalled, a trader said. Short-covering has largely been behind copper’s rebound from 5-1/2 year lows of $ 5,339.50 a tonne seen in January.
“That period has seen a certain amount of short-covering but by no means all of it,” said Guy Wolf, global head of market analytics at broker Marex Spectron. “Our view would be that dips in copper should continue to be bought.”
He said Marex’s Global Copper Sentiment Index remains depressed at minus 62.5 points, even though it has recovered from a low of minus 95.7 in late January and gained over 10 points in the latest week.
Three-month copper on the London Metal Exchange failed to trade in official open outcry activity and was bid up 0.1 percent at $ 5,766.50 a tonne.
On Tuesday, copper slid 1.8 percent while on Monday prices hit the lowest since Feb. 24 at $ 5,714 a tonne.
Weighing on the market was data showing growth in China’s investment, retail sales and factory output all missed forecasts in January and February and fell to multi-year lows.
Also dampening metals was the euro’s dive to a new 12-year low against the dollar after the European Central Bank began its 1 trillion euro bond-buying programme this week.
Those negative influences were balanced by persistent concerns about shortfalls in output following a series of hiccups at copper mines.
“It (copper) definitely got a lot of momentum behind it due to these supply issues, and the market is certainly focused on those a lot more than what a strong USD would mean for consumption,” said strategist Daniel Hynes of ANZ in Sydney.
Cuts in copper mine output are raising doubts about the extent of a widely expected global surplus that has driven down prices, and reduced production could support a market rebound. Tin shed 0.6 percent in official rings to $ 17,700 a tonne, but other metals failed to trade in official activity.
Aluminium was bid up 0.3 percent to $ 1,768 a tonne after dropping to $ 1,761, matching its low on Tuesday when it hit its weakest level in nearly a year. Nickel was bid unchanged at $ 14,050 a tonne, zinc was bid up 0.2 percent at $ 2,024 and lead was bid 0.1 percent firmer at $ 1,813.
Copyright Reuters, 2015
