Monday, 16 March 2015 17:39
LONDON: Copper was steady on Monday as a weaker dollar and comments by China’s leader about the economy offered support, counteracting another rise of inventories.
Three-month copper on the London Metal Exchange was unchanged at $ 5,855 a tonne by 1044 GMT. It closed slightly firmer on Friday, when it also hit its highest since March 3 at $ 5,900 a tonne.
Related Post
Metals markets and Chinese equities got support after Premier Li 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 U.S. 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 U.S. currency for buyers outside the United States.
Copper scaled back from its session highs after LME data showed inventories rose by another 4,000 tonnes to 337,575 tonnes, up 91 percent so far this year.
The ballooning exchange stocks, with Shanghai inventories near a record, has raised the risk of a correction, BNP Paribas said.
Three month aluminium gained 0.62 percent to $ 1,783 a tonne. The discount of the cash aluminium contract against benchmark three-month 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 slow down the fall in premiums,” he said.
Copyright Reuters, 2015
