Tuesday, 17 March 2015 02:24
LONDON: Copper dipped on Monday, pulled down by another rise of inventories, but losses were limited by a weaker dollar and comments by China’s leader about the economy.
Three-month copper on the London Metal Exchange was last bid down 0.3 percent at $ 5,835 a tonne.
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It had closed slightly up on Friday, when it also hit its highest level since March 3 at $ 5,900 a tonne.
Copper went into the red after LME data showed inventories rose by another 4,000 tonnes to 337,575 tonnes, up 91 percent so far this year.
Earlier, metals markets and Chinese equities received support after Premier Li Keqiang said China has a lot of room to manoeuvre its policy and boost its economy.
“For China’s premier to come out to say, ‘We recognise these risks and we are prepared to act to ensure that growth doesn’t slow too much’ – that’s exactly what the market wants to hear,” said Nic Brown, head of commodities research at Natixis.
Prices have been gaining ground as China’s factories ramp up after the Lunar New Year, climbing from 5-1/2 year lows of under $ 5,400 a tonne in January, but slowing economic growth and ample refined supply has blunted momentum.
Metals markets also got support from a weaker dollar, but Brown said it was unclear how long this would last ahead of the US Federal Reserve meeting that concludes on Wednesday.
After months of strong jobs data, expectations have been growing that the Federal Reserve would signal a June rate rise, potentially giving more momentum to the dollar.
A softer dollar increases purchasing power for commodities priced in the US currency for buyers outside the United States.
Three-month aluminium ended down 0.1 percent at $ 1,770 a tonne.
The discount of the cash aluminium contract against benchmark three-months was at $ 3.25 a tonne, down from $ 20.50 a month ago.
This movement usually represents tighter supply and Brown said it may help support premiums – surcharges for physical aluminium – which have been sliding in recent weeks.
“If we get a backwardation developing at the front end of the curve, that suggests that there is some physical scarcity in the market, which might be enough to slow down the fall in premiums,” he said.
A backwardation means the cash contract moves to a premium to the forward contract.
Among other metals, zinc closed down 0.3 percent at $ 2,005 a tonne, lead fell 1.5 percent to end at $ 1,750, tin ended up 1.3 percent at $ 17,540 and nickel closed down 1.4 percent at $ 13,925.
Copyright Reuters, 2015
