Copper scaled a seven-week high on Wednesday on expectations of tighter supplies, though the rally could be short-lived without improvements in demand from top consumer China or more substantial production cuts. Benchmark copper on the London Metal Exchange ended up at $5,365 a tonne from $5,345 at the close on Tuesday. The metal used in power and construction had risen earlier to $5,434.50.
-- Bank of America sees risk of copper hitting $4,000/T in Q4 2016
A gain of about 5 percent so far this week was triggered by mining giant Glencore's plan to suspend 400,000 tonnes of copper output from Africa. "It's mostly short-covering; some of these guys did not expect such a move to cut copper output," said Carsten Menke, commodities research analyst at Julius Baer.
"It's price supportive, but the cut does not mean a market deficit. The recovery will probably run out of steam." 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. Over the next few weeks the market will discover how China's economy fared in August, with the release of a data including industrial production and investment figures.
"We believe the multi-year slowdown in China continues and, given the lack of an immediate catalyst that could bring the entrenched bear market to an end for many raw materials, commodities including copper and iron ore should keep falling next year," Bank of America Merrill Lynch said in a note. The bank said there is a risk copper could hit $4,000 a tonne the final quarter of next year, though it added such a decline is likely to prompt accelerated mine closures that should ultimately realign supply with demand. World No 1 copper producer Codelco has temporarily halted the concentrator at its massive Chuquicamata mine for security reasons following a protest.
Aluminium hit a six-week high of $1,655.50. The metal used in transport and packaging later ended at $1,630 from $1,631 on Tuesday. Century Aluminum said it will close a potline at its Kentucky smelter immediately as it prepares to shut the entire plant by the end of next month. "This is one little pop to the upside - aluminium could easily go up $10-15 from here but then there's even more chance of it moving down again," said a trader.
Zinc and lead hit one-week highs at $1,841 and $1,732 respectively. Nickel matched the $10,140 top achieved on September 3. Zinc ended at $1,818 from Tuesday's $1,813, while lead closed at $1,718 from $1,689 and nickel at $10,100 from $10,000. Tin closed at $14,950 from $14,850.
Comments
Comments are closed.