Copper held steady on Wednesday, paring earlier losses after the dollar weakened and a rise in US new home sales boosted sentiment on the economic and demand outlook. Copper for three-month delivery on the London Metal Exchange ended at $3,990 in official rings, having earlier rallied to a days high of $4,020. It hit a session low of $3,890, versus $3,975 a tonne on Tuesday.
The dollar receded after US Treasury Secretary Timothy Geithner said he was "quite open" to Chinas suggestion of moving towards a currency system linked to the International Monetary Funds Special Drawing Rights. "The weaker dollar is the main factor," said Charles Cooper, an analyst at Evolution Securities. "This is the market reacting to any signs of stimulus."
Continuous drawdowns in copper inventories and buying by the State Reserves Bureau (SRB) of China, the worlds top copper consumer, boosted prices more than 20 percent in March alone. Copper inventories in London fell to 503,675 tonnes, with cancelled warrants slipping to 22,425 tonnes from 22,675 tonnes on Tuesday. Aluminium has also staged a breathless rally over the past couple of weeks, which analysts say was driven by short covering and lacked fundamental dynamics.
Purchases by the Chinese government have also underpinned prices. Chinas SRB has bought 590,000 tonnes of aluminium at above-market prices to prevent forced plant closures and preserve jobs, prompting other provinces to do the same - a move encouraged by other provincial governments. LME-registered inventory fell on Wednesday by 3,000 tonnes but still stands at 3.45 million tonnes, near its record highs while the rise year-to-date is at around 1.13 million tonnes.
Three-months aluminium was at $1,417 a tonne from $1,412 a tonne on Tuesday, having gained more than 10 percent in March, while nickel was at $9,650 from $9,750. Battery material lead was at $1,295 from $1,284 and zinc was at $1,295 a tonne from $1,275. Tin was at $9,970 a tonne from $10,025 a tonne. The backwardation for tin - premium for cash material over the three-month contract - is now around $95 a tonne, down from $225 on Tuesday, but still more than double the $32.5 a tonne in early February.
Comments
Comments are closed.