Copper hits seven-week high but Chinese demand worries persist

Benchmark copper on the London Metal Exchange was trading up 0.5 percent at $5,373 a tonne at 1028 GMT.


Copper prices have also drawn strength from an announcement by Glencore PLC on Monday that it would suspend operations at two large copper mines in Africa. “It’s price supportive, but the cut does not mean a market deficit, the recovery will probably run out of steam”.

Tuesday’s data revealed copper imports by China, which accounts for roughly 40% of the global demand for refined copper, rose 2.9% from a year earlier to 350,000 tonne, although the imports remained flat at the July level. Price pressure is still being exerted by weak growth in China, and by the strong dollar, which makes dollar-priced commodities more expensive for non-US firms. Still, the world’s second largest economy has only imported 2.94 million tons of copper since the beginning of the year, which is around 8% lower than in the comparative period in 2014, Commerzbank said.

Spot prices hit their lowest since mid-August on Monday, at $US1,116.20 an ounce, after Friday’s hotly anticipated USA payrolls data failed to provide clarity on the timing of the Federal Reserve’s first interest rate rise in almost a decade.

“There is room for the rallies to continue, but we would be wary of getting too bullish as further setbacks in China, or further contagion from China in emerging markets might not be that far away”, said William Adams, head of research at Fastmarkets, in a note.

Aluminium hit a six-week high of $1,655.50.

MCX copper prices rose by 0.2 percent and closed at Rs.363.3/kg in line with global trends.

Zinc was last higher at $1,830 from $1,813 on Tuesday, lead at $1,725 from $1,689 and nickel at $10,095 from $10,000.


Meanwhile, inventories of copper monitored by the LME fell for the sixth day, declining by 1.7%, exchange data showed.

Traders meet daily at a ring of red leather sofas at the exchange and shout buy and sell orders for metals a tradition dating back to 1877