LONDON: Copper prices steadied on Thursday, helped by a softer dollar and low inventories, but concerns about demand in top consumer China and Europe weighed on sentiment.
Benchmark copper on the London Metal Exchange was flat at $9,840 a tonne at 1700 GMT, after hitting a session low of $9,720 a tonne.
“China’s New Year holiday and the Winter Olympics mean subdued (manufacturing) activity and demand in China for base (metals),” a metals trader said. “Monetary policy tightening could put the skids under demand in Europe.”
DOLLAR: Copper recovered earlier losses as the US currency reversed gains. A sliding dollar makes dollar-denominated metals cheaper for holders of other currencies.
This is a relationship used by funds to generate short-term buy and sell signals.
EUROPE: A sizeable minority of European Central Bank policymakers wanted to dial back the ECB’s monetary stimulus already at Thursday’s meeting and a decision in March now looks likely, barring a big drop in inflation, two sources told Reuters.
STOCKS: Copper inventories in LME-approved warehouses were at 82,400 tonnes, down 65% since August. Cancelled warrants - metal earmarked for delivery - at 31% of the total suggest more copper deliveries are due.
Concern about supplies of copper, used widely in the power and construction industries, on the LME market has seen the cash contract trade at a premium to the three-month contract for some months now.
NICKEL SPREADS: The cash nickel contract has also traded at a premium to the three-month contract for some months due to low stocks in LME warehouses, which at 88,182 tonnes have dropped 65% since April last year.
Cancelled warrants at 47% suggest more nickel will be delivered out.
About 74% of the total LME stock is bagged briquette, easily crushed into small particles and dissolved in sulphuric acid to make nickel sulphate used for electric-vehicle batteries.
Three-month nickel rose 0.4% to $22,845 a tonne.
OTHER METALS: Aluminium gained 2% to $3,047, zinc was down a touch at $3,607, lead fell 2% to $2,196 and tin ceded 0.3% to $42,915.
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