Shanghai Futures Exchange copper rose 0.5 percent to 47,120 yuan ($6,842) a tonne on Thursday as broader investor sentiment revived, while disruptions piled up in the zinc market. Premiums for copper and zinc deliveries in Shanghai fell. Zinc premiums fell $10 to $105-$115, the lowest since August 2015, while Shanghai copper premiums have fallen to around $45, traders and analysts said, the lowest in around a year.
Shanghai bonded copper stocks are about 620,000 tonnes, according to CRU, up from around 550,000 tonnes a month ago. Ample stocks, normal for this time of year, were weighing on copper premiums, said Cru analyst Chris Wu. Supply concerns that have underpinned copper have been exacerbated by floods in Peru, just ahead of the start of the second quarter, seasonally the strongest for demand.
"Probably base metals demand is not in a strong recovery yet, but from the infrastructure sector and the steel industry, orders are looking pretty good," said Bonnie Liu, general manager at GF Futures in Hong Kong. "Base metals always lag behind steel so you probably need to wait for a few weeks (to see demand pick up)," she said.
Leaders of the striking union at BHP Billiton's Escondida mine in Chile will meet with the rank-and-file before making more decisions about negotiations. A railway used by copper, zinc and silver mines to transport their concentrates from Peru's central Andes to port is likely be out of action for at least two to three weeks following damage from floods and mudslides. Brazilian group Votorantim has halted operations at its zinc smelter Cajamarquilla in Peru while miner Milpo, declared force majeure on Wednesday due to the floods. A 3-1/2-week strike at Noranda Income Fund's zinc processing facility in Quebec is showing no signs of ending, with no talks set between workers and management.
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