Copper hits two-week high on hopes Britain will stay in EU

Copper rose to its highest in more than two weeks on growing expectations Britain will vote to remain in the European Union and on a weaker dollar, though traders said a lack of liquidity meant moves were exaggerated. Benchmark copper on the London Metal Exchange ended up 0.6 percent at $4,700 a tonne. Earlier on Wednesday it touched $4,733.50, its highest since June 6.
Traders said volumes were low as consumers, producers and investors waited to see the result of Thursday's vote, but betting odds suggesting Britain will choose to remain in the EU had boosted market confidence. "This is allowing some risk appetite to come back and that, together with a soft dollar, are behind the positive mood," Societe Generale analyst Robin Bhar said.
"Most people are probably now positioned the way they want to be or square, it's a waiting game now until Friday." A lower US currency makes dollar-denominated metals cheaper for non-US firms, which could boost demand. Looking ahead though, much will depend on top consumer China. "Our latest China survey shows a moderating copper market, but importantly not a contracting one. End-user demand continues to grow, but now very slowly," Macquarie said in a note. "Fabricators have slightly lifted their capacity utilisation rate, yet it remains lower year-on-year. Traders' sales improved last month and smelters saw better orders over the same period, helped by the stable downstream demand as well as reduced net copper imports."
Three-month aluminium traded down 0.1 percent at $1,634 a tonne and zinc rose one percent to $2,046. Zinc is up more than 27 percent so far this year on worries about shortages created by mine closures. But some think the gains have gone too far, too fast. Standard Chartered analysts, after meeting investors last week, said they were reducing their long exposure to zinc until concentrate market tightness starts to feed into the refined market. "Physical market participants indicated that there was no evident tightness in the refined market currently." Lead was up 0.4 percent at $1,716, tin was flat at $17,150 and nickel added 0.4 percent to reach $9,230 a tonne.