Monday, 13 July 2015 17:00
LONDON: Base metals rebounded on Monday after Greece and its creditors agreed a debt deal, but copper’s gains were capped by data showing a drop in Chinese imports last month.
The London Metal Exchange joined other markets in reacting with relief to news that euro zone leaders clinched a deal with Greece after all-night talks at an emergency summit.
Three-month LME copper gained 0.7 percent to $ 5,628 a tonne by 1007 GMT, recovering from early losses of more than 1.5 percent, safely above six-year lows struck last week at $ 5,240 a tonne. “The Greek crisis had been weighing on sentiment; nobody was quite sure which way it would go,” said Caroline Bain, senior commodities economist at Capital Economics. “But this morning the Chinese trade data must be weighing on copper a bit.”
Copper imports in China, the world’s biggest consumer of the metal, fell 2.8 percent in June from the previous month, hitting a four-month low amid weak seasonal demand. Bain, however, expects a upturn in Chinese base metals imports in the coming months.
“We’re starting to see signs of stimulus actually feeding through into the real economy, so we would expect import volumes to pick up in the second half of this year.”
There was also some brighter news in overall Chinese trade data, which showed export sales rose for the first time in four months in June. Investors were also keeping a close eye on China’s property sector, with home price data due at the end of the week.
“China’s property sector has been the dominant driver of weak commodity prices in the past 12-24 months, and the property cycle has weakened this past year,” said Dan Morgan, an analyst at UBS in Sydney.
“April, May, looked like a bit of a turning point for the property sector. What we’re looking for is that momentum to continue.” Nickel was the strongest performer on the LME, jumping 2.3 percent to $ 11,535 a tonne on bargain-hunting and short-covering. “Last week was hugely volatile and nickel has been thrown the furthest from fundamentals. Out of all of them, I think nickel presents the best opportunity,” Morgan said.
Lead gained 1.6 percent to $ 1,820 a tonne after LME data showed one party has taken control of between 40 percent and 50 percent of LME lead inventories worth about $ 130 million.
Hedge funds and money managers bailed out of COMEX copper, gold and silver futures and options at the fastest pace in at least a year in the week to July 7, at the height of the commodities market’s biggest rout in years.
