London copper rises ahead of expected Fed interest rate cut

Madiha Shakeel July 31, 2019

SINGAPORE: Copper prices in London rose on Wednesday ahead of an expected interest rate cut by the U.S. Federal Reserve, but were on track to fall this month amid slowing growth from top consumer China.

The Fed is expected to lower interest rates on Wednesday for the first time in over a decade, which should support commodities prices by boosting growth and weakening the U.S. dollar, making metals cheaper for buyers with other currencies.

Three-month copper on the London Metal Exchange (LME)  rose 0.2% to $5,958 a tonne by 0432 GMT, but is still heading for a monthly fall as the year-long U.S.-China trade war weighed on global growth and metal demand.

FUNDAMENTALS

* TRADE TALKS: U.S. President Donald Trump on Tuesday warned China against waiting out his first term to finalise any trade deal, saying if he wins re-election in the November 2020 U.S. presidential contest, the outcome will be worse for China.

* CHINA ECONOMY: China will step up efforts to boost demand and support the economy, but will not use the property market as a form of short-term stimulus, a top decision-making body of the ruling Communist Party said on Tuesday.

* CHINA PMI: China’s factory activity shrank for the third straight month in July amid the trade war, with the official Purchasing Managers’ Index (PMI) at 49.7 in July, slightly improving from June’s 49.4 in June and higher than analysts’ expectation.

* “This shows that stimulus measures announced previously are having some positive impact on the manufacturing sector,” said Analyst Helen Lau of Argonaut Securities.

* FORECASTS: Analysts have marked down this year’s forecasts for copper and other industrial metals prices in recent months as top consumer China struggles to revive its economy, a Reuters poll showed.

* LEAD: About 18,000 tonnes of lead are expected to be off the market as Korea Zinc is carrying out maintenance at a lead refinery until late August, but the company had secured inventories ahead of the maintenance, a spokesman said.

* PRICES: LME aluminium rose 0.6%, nickel advanced 0.2% and lead increased 0.2% and tin rallied 0.4% while zinc dipped 0.4%.

* SHANGHAI: The most active copper contract on the Shanghai Futures Exchange fell 0.7%, nickel rose 1.1%, zinc dipped 0.6%, lead fell 0.9% and tin  decreased 0.1%.

Copyright Reuters, 2019

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