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Wednesday, 02 September 2015 17:00
LONDON: Copper steadied on Wednesday after Chinese equities recouped some of their losses following further government intervention, though falling oil prices and an August slowdown in world factory activity kept a lid on gains.
A number of brokerages in top copper consumer China have pledged additional funds to buy equities, answering the latest government calls to support the wobbly stock market.
“We remain constructive on copper. The China story is over-played versus actual (copper) demand conditions which, while not thrilling, haven’t deteriorated as much as the price implies,” Vivienne Lloyd, analyst at Macquarie, said.
“Chinese shorts don’t seem convinced (about selling) at the moment, London Metal Exchange stocks are falling, (Chinese) bonded stocks are down (and) copper is showing resilience above $ 5,000.”
Three-month copper on the London Metal Exchange was up 0.2 percent to $ 5,077 a tonne by 1028 GMT, after a 1.3 percent drop the previous session. Copper hit its weakest in six years at $ 4,855 a tonne at the beginning of last week.
Underlining global growth fears, China’s manufacturing industry contracted and euro zone and US growth eased in August, data showed Tuesday, while the International Monetary Fund cut its forecast for world growth this year.
Copper found some support from a larger drop in LME prices compared to those in China, which have turned imports profitable, Reuters calculations show.
China consumes nearly half the world’s copper. Also putting a floor under prices, Ok Tedi Mining Ltd’s Papua New Guinea copper mine is likely to stay shuttered until the first quarter of 2016 as an intensifying El Nino worsens drought conditions. “On the base (metals) there is no doubt we have recently seen CTA short covering.
And with Chinese now on holiday until next week, there will have been an element of risk reduction there,” broker Marex Spectron said.
But Standard Chartered cut its price forecasts for copper, citing extreme China pessimism and persistent surplus market conditions.
LME nickel rose 1 percent after senior government officials in Indonesia reaffirmed that the country will keep its export ban on nickel ore. Media reports had suggested the country might relax curbs to prop up its slowing economy.
LME tin rallied by 1.5 percent as cash tin traded at a $ 400 a tonne premium against the three-month benchmark on Wednesday, near its highest since 2009.
Tin stocks on hand for delivery out of LME warehouses have hit their lowest since 2008 after Indonesian tin companies halted exports when new rules for shipments were introduced on Aug. 1.
But some companies including state-run PT Timah have since received licences to export, suggesting at least in the physical market supply tightness should be short lived.
