MELBOURNE: London copper climbed on Wednesday as traders took profit on short positions and after upbeat Chinese trade data eclipsed an overall drop in the country's imports of refined metal.
China unexpectedly posted a rare trade deficit in February as imports surged far more than expected to feed a months-long construction boom, driven by commodities from iron ore and copper to crude oil and coal.
That copper demand, however, was mainly in the form of ore imports for use in domestic smelters rather than an intake of refined metal.
"Copper was the only major commodity to show some weakness, with imports of refined copper and products falling 19 percent.. This was partly mitigated by strong copper concentrate imports and subsequent surge in domestic copper production," said ANZ in a report.
Three-month copper on the London Metal Exchange
was up 0.2 percent at $5,786 a tonne by 0725 GMT, paring a 1.5 percent loss during the previous session. Prices on Tuesday fell to $5,759 a tonne, the weakest since Feb. 3.
Shanghai Futures Exchange (ShFE) copper
fell 1.1 percent to 47,140 yuan ($6,831) a tonne. Earlier in the session, prices hit their lowest in a month at 46,910 yuan.
Copper prices have been dragged down by a surge in exchange inventories that has fanned concern about demand strength in Asia. LME copper stocks have jumped by one-third in the past week to the highest since late January at about 262,000 tonnes.
However, mine disruptions in Chile, Peru and Indonesia are still supporting prices, with the prospect of labour unrest expected to carve deeper into supply deficits forecast for this year.
"We think price consolidation in the metals space is short term as metals, especially copper and nickel, continue to face supply uncertainties while demand across the globe is getting more visible led by China and US," Argonaut Securities said.
In other metals, LME nickel edged down by 0.3 percent to $10,615 a tonne, extending the 4 percent drop during Tuesday's session when prices hit a two-week low on expectations the Philippines may soften mine closure plans. ShFE nickel
ended Wednesday's session down 3.3 percent.
BMI Research expects refined nickel prices to ease over a three-to-nine month horizon, as Indonesia resumes exports and as major nickel mines in the Philippines, the world's top exporter, manage to maintain production.
"Although environmental policies in the Philippines have threatened the closure of up to 20 nickel mines, we remain confident that there will not be any significant output declines in the Philippines in 2017 compared to 2016 as most major miners will avoid the regulatory crackdown."
Philippine President Rodrigo Duterte said on Tuesday he hopes there will be a "happy compromise" between the mining industry and protecting the environment.
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