Copper cheered by US economic data, new lockdowns weigh
- While benchmark copper on the London Metal Exchange traded up 1.6% at $8,918.5 a tonne in official rings, prices of the metal used as a gauge of economic health by investors are down about 7% since hitting 9-1/2-year highs of $9,617 last month.
- "We are in a consolidation period, not necessarily because of fundamentals," said Julius Baer analyst Carsten Menke.
LONDON: Copper prices rose on Friday as optimism about economic growth in the United States encouraged purchases of the industrial metal, but rising coronavirus cases, new lockdowns and the slow pace of vaccinations in the euro zone capped gains.
While benchmark copper on the London Metal Exchange traded up 1.6% at $8,918.5 a tonne in official rings, prices of the metal used as a gauge of economic health by investors are down about 7% since hitting 9-1/2-year highs of $9,617 last month.
"We are in a consolidation period, not necessarily because of fundamentals," said Julius Baer analyst Carsten Menke.
"The overall risk assessment in commodity and financial markets seems to have changed because of the rise in COVID cases in continental Europe."
GROWTH: The number of Americans filing new claims for unemployment benefits dropped to a one-year low last week, a powerful boost to an economy on the verge of stronger growth as the public health situation improves.
COVID: European nations including France, Switzerland and Norway have tightened restrictions to address rising coronavirus cases.
INVENTORIES: Copper stocks in LME registered warehouses at 123,800 tonnes are up 65% since late February.
But cancelled warrants - metal earmarked for delivery - at 30% and two companies holding large amounts copper warrants are fuelling worries about availability on the LME market.
This is why the cash over the three-month copper contract is trading at a premium after a brief period trading at a discount.
TIN: The large premium for the cash over the three-month tin contract is due to major shortages for the soldering metal. The premium was last at $2,267 a tonne, having risen above $5,200 a tonne in the middle of February.
James Willoughby, analyst at the International Tin Association, said "news of a container ship blocking the Suez canal will not make good reading for European tin users already waiting for metal from Asia".
Three-month tin climbed 1.8% to $25,648 a tonne.
OTHER METALS: Aluminium rose 1.6% to $2,285 a tonne, zinc was up 1.7% to $2,819, lead added 2.2% to $,962 and nickel gained 1% to $16,312.
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