Friday, 28 August 2015 17:16
LONDON: Copper prices dipped on Friday after a sharp rebound the day before as worries about oversupply resurfaced, but losses were modest after the stock market in top metals consumer China recovered for a second day.
Copper shot up 4.2 percent on the London Metal Exchange on Thursday, lifted by a bounce in global stock markets, buoyant US economic data and the announcement of production cuts by miner Freeport-McMoran Inc. Freeport lowered its copper sales estimates for 2016 and 2017 by about 150 million pounds.
“You wake up this morning (after Thursday’s rally) and you wonder how much has really changed in the world of copper. Ultimately the Freeport production cuts are not huge, and it’s also next year, not now,” said Stephen Briggs, metals strategist, BNP Paribas.
“They’re the largest private sector copper producer in the world, so maybe the market is thinking is that all we’re going to get? There’s probably some disappointment setting it.”
Benchmark LME copper was down 1.1 percent at $ 5,082 a tonne at 1005 GMT after posting its biggest one-day percentage gain since May 2013 in the previous London session.
Thursday’s gain helped distance copper from six-year lows of $ 4,855 plumbed this week on fears of a hard landing in China, which intensified after Beijing devalued the yuan earlier in August.
The global copper market is expected to be in surplus by 477,000 tonnes this year, said Bruce Alway of GFMS, the metals research and forecast team at Thomson Reuters.
Despite the slide in copper prices by nearly a fifth this year, miners’ costs have also fallen, so major production cuts are not likely, he added.
“Unless prices remain at this level for a sustained period, I don’t see a huge risk of large scale closures,” Alway told the Reuters Global Base Metals Forum.
Copper’s well-supplied situation was highlighted by the opening on Friday of First Quantum Minerals’ $ 2.1 billion copper Sentinel mine, which is due to produce to 280,000 to 300,000 tonnes of copper per year at full production.
Helping to cap losses as a surge in Chinese equities on Friday after a five-day plunge that panicked global markets.
Zinc, by contrast, gained 1.9 percent to $ 1,785 a tonne, building on its 3 percent gain on Thursday, after Australian officials threatened to close the giant McArthur River zinc mine owned by Glencore.
Nickel dropped 1.3 percent to $ 9,925 a tonne after galloping up 5.1 percent in the previous session, the biggest gain in over a year.
