Copper rebounds from probe below $7,000 after US data

LONDON: Copper prices rebounded on Friday after touching 20-month lows after U.S. data eased worries about high inflation and pushed the dollar lower.

The three-month copper contract on the London Metal Exchange had gained 0.2% to $7,186.50 a tonne by 1600 GMT.

It had earlier dropped as much as 3% to $6,955 a tonne, slipping below the $7,000 mark for the first time since November 2020.

Copper prices had been hit gloomy economic data from China and worries that aggressive rate hikes to control inflation may trigger a global recession.

But copper clawed into positive territory after data showed U.S. consumers tempered their inflation expectations in July alongside a sharp drop in gasoline prices.

The development, likely to be welcomed by Federal Reserve officials, knocked the dollar index lower, making commodities priced in the U.S. currency cheaper for buyers using other currencies.

Xiao Fu, head of commodity market strategy at Bank of China International, said the copper market was due to have a rebound with its tight supply situation.

“I think the market is a bit oversold because there’s not much change on the fundamental side. The inventory levels are still quite tight and there are still supply disruptions and bottlenecks,” she said.

The data from China, the world’s biggest metals consumer, had showed economic growth slowed sharply in the second quarter, growing at a tepid 0.4% from a year earlier, the worst showing since the data series began in 1992.

“There are still concerns about the property market in China and it’s unclear how the situation will develop in the coming months,” Fu added.

Chinese regulators’ assurances of help in delivering property projects on time failed to convince some homebuyers threatening to stop mortgage payments.

Lead was the strongest LME performer, jumping 5.5% to $1,935 a tonne on a tight supply situation.

LME lead inventories are near 2007 lows while cash LME lead is at a premium of $22.15 to the three month contract.

LME aluminium rose 0.2% to $2,340.50 a tonne, nickel gained 0.2% to 19,440, zinc climbed 1.7% to $2,924.50 while tin advanced 2.8% to $24,995.

Earlier aluminium had touched the lowest since May last year, nickel hit a nine month low and zinc sunk to the lowest in a year.