LONDON: Copper rose alongside equities on Monday as traders bought back short positions on the expectation of bottoming prices ahead of a slew of data this week from top consumer China and the United States.
Benchmark copper on the London Metal Exchange (LME) traded 1.2% higher at $8,970 a metric ton in official rings. Prices of the metal used in power and construction hit a 4-1/2 month low of $8,714 last week.
Mounting fears of recession in the United States triggered a selloff last week in equities and commodities. However, better than expected weekly US jobs data helped to calm markets.
“There’s a fair amount of short-covering going on still and some buying interest from China at these lower prices,” one metals trader said, adding that Chinese buyers had been sidelined after prices rose to records above $11,100 in May.
Industrial metals markets are awaiting July data due this week on China’s new yuan loans and total social financing, viewed as an indicator of future industrial metals demand.
Also due from China this week is data on house prices, industrial production and urban investment. US consumer prices data on Wednesday will also be in focus and could determine the timing of interest rate cuts by the US Federal Reserve, which would be likely to weaken the US currency and buoy demand for dollar-priced metals.
Traders also pointed out a more than 12,000 ton rise in cancelled warrants - metal earmarked for delivery from LME-registered warehouses - over a couple of days last week as a sign that the uptrend in copper stocks could be ending.
Copper inventories in LME warehouses are up 185% at 296,125 tons since the middle of May. Also on the radar, but not yet having any impact, is Zambia’s closing of a border with the Democratic Republic of Congo, a major copper producer.
Congo production is typically transported through Zambia to South Africa for shipment elsewhere. In other metals, aluminium was up 0.8% at $2,320 a ton, zinc added 0.8% to $2,758, lead gained 1.2% to $2,063, tin advanced 1.8% to $31,875 and nickel was little changed at $16,160.
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