LONDON: Copper prices steadied on Thursday on expectations of improved copper consumption in China and a larger than previously forecast cut in interest rates by the US Federal Reserve in September. Three-month copper on the London Metal Exchange was flat at $8,772 a metric ton in official rings, having earlier slipped to $8,716, within touching distance of Monday’s 21-week low of $8,714.
Copper prices are close to the bottom after retreating 5% in a week, one trader said, citing improving fundamentals.
“Lack of concentrates and domestic scrap will carry on to eventually weigh on copper production in China. It will be translated to a drawdown of existing copper stocks in next two months,” the trader said. Chinese imports of copper concentrates, used by smelters to make copper, dropped to a one-year low of 2.165 million tons in July, data showed on Wednesday.
Mined production from top copper producer Chile remained sluggish while a potential strike at Escondida, the world’s biggest copper mine, is still looming. Operator BHP had turned to the Chilean government for mediation after failing to reach agreement with the union. Also supporting prices were lower copper stocks in warehouses monitored by the Shanghai Futures Exchange(ShFe).
Inventories have fallen 23% since June, reflecting a return of Chinese physical buyers as prices have retreated.
Outside China, however, copper supply remains abundant. LME copper inventories jumped nearly threefold in less than three months to 294,750 tons on Wednesday.
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