Copper prices recovered on Thursday after weak US data reinforced prospects of rate cuts from the US central bank, but worries about demand in top consumers China and the United States capped gains. Benchmark copper on the London Metal Exchange ended up 0.1% at $5,858 a tonne. Earlier in June, prices of the metal used by investors as a gauge of economic health touched $5,740 a tonne, the lowest since January 3.
"There was some profit-taking on short copper positions (bets on lower prices) after a batch of weak US data," a metals trader said. "The data reinforces the idea of a cut (from the US Federal Reserve). But the US-China trade dispute is still there, it hasn't been resolved." JOBS: The number of Americans filing for unemployment benefits unexpectedly rose last week, adding to concerns about growth.
A Fed rate cut could weaken the US currency and make dollar-denominated metals cheaper for importers using other currencies, potentially boosting demand. China accounts for around half of global copper demand, estimated at 24 million tonnes this year, while the United States consumes nearly 10%. China said on Thursday it will not yield to any "maximum pressure" from Washington, and any attempt by the United States to force China into accepting a trade deal will fail.
"As long as they only talked about tariffs I wasn't overly concerned about demand as it just makes things more expensive," said Julius Baer analyst Carsten Menke. "But bans and boycotts like those on Huawei disrupt supply chains which will have a negative impact on demand." Latest developments include a ban on federal contracts with firms that do business with the Chinese telecom giant, part of a defence law passed last year.
Weighing on copper are stocks in LME registered warehouses at 248,550 tonnes, up 35% since the end of May. Traders say the market would need to see a similar uptrend in warehouses monitored by the Shanghai Futures Exchange to believe demand was weakening. Latest data showed copper stocks in ShFE warehouses at 145,626 tonnes, down more than 40% since March 31.
Unionised workers at Codelco's Chuquicamata copper mine, one of the world's largest, said on Wednesday they would strike after failing to reach a labour deal with the world's top copper producer. Aluminium was 0.2% lower at $1,787, zinc lost 1.3% to $2,477, lead slipped 0.4% to $1,889.5 and tin rose 0.3% to $19,350.
Nickel was untraded in the rings. In electronic trading, it was a touch higher at $11,840 a tonne compared with an earlier two-week high at $12,050. Traders had marked up nickel prices due to concern about supplies from major producer Indonesia where floods have lashed Sulawesi province.