The most-traded July copper contract on the Shanghai Futures Exchange closed up 0.2 percent at 51,050 yuan ($8,023) a tonne on Thursday as the US dollar hovered near a five-month high against the euro and amid worries over slower demand in top copper user China. In Shanghai, aluminium climbed 1 percent to end at 14,885 yuan per tonne, while nickel added 0.4 percent to 107,820 yuan.
To another report, China's refined copper output in April jumped 12.3 percent compared to same period last year to 778,000 tonnes, data from the National Bureau of Statistics showed on Thursday. Zinc production went up 4.8 percent year-on-year in April at 481,000 tonnes. April lead output rose 2.4 percent to 381,000 tonnes. Alumina output fell 1.5 percent last month to 5.8 million tonnes. Iron ore production edged up 0.8 percent to 67.47 million tonnes in April.
ANZ analysts said in a note that the copper market appeared to be tightening, with the front-end of the curve moving into backwardation, when prices for future delivery are lower than those for immediate dispatch. The one-day spread on tomorrow's contracts, or tom-next spread, stood at $50 per tonne. "This appears to be creating a short squeeze, with many traders forced to buy back short positions," ANZ said.
"If you look at the longer term, there's definitely a bull case for copper," Argonaut Securities analyst Helen Lau said, citing declining ore grades and rising cost, among other factors. "But in the short-term, we still need to grapple with slowing copper demand from China especially in the power sector." Metals markets are moving into a new bull cycle that will be longer and shallower than the last, driven by rising inflation and dispersed demand growth, panelists said at the LME week Asia conference in Hong Kong.
Aluminium Corp of China Ltd, or Chalco, plans to export 30,000-50,000 tonnes of alumina in May, the company's president said. The United States and China launch trade talks on Thursday in a bid to avert a damaging tariff war, with the White House's harshest China critic relegated to a supporting role, senior Trump administration officials said. Australia's Kidman Resources said it would supply lithium for Tesla Inc's electric car batteries, the latest in a string of deals by carmakers securing supplies of the mineral as demand surges for clean cars.