Copper edges higher

LONDON: Copper prices ticked higher on Tuesday after Russia returned some troops to base after exercises near Ukraine, easing fears about a potential invasion and boosting financial markets. Three-month copper on the London Metal Exchange (LME) rose 0.5% to $9,965 a tonne by 1700 GMT after a 0.6% gain the previous day.

Comex copper gained 0.6% to $4.54 a lb. It was unclear how many Russian units were being withdrawn to their bases after an estimated 130,000 Russian troops had been moved close to the Ukraine border.

“The metals markets in the short-term remain at the mercy of the Ukraine situation, moving back and forth between risk-off and risk-on dynamic,” said Gianclaudio Torlizzi, partner at consultancy T-Commodity in Milan.

“But if we exclude the geopolitical pressures, the general trend remains on the upside for most of the metals.”

Any downside moves, including knee-jerk reactions to faster than expected US monetary tightening, would be a buying opportunity, Torlizzi added. He has targets of $11,000 for copper, $3,500 for aluminium and $30,000 for nickel.

With physical buying in China expected to start picking up in the next few weeks as the economy returns to normal after the Lunar New Year holidays, visible copper stocks are likely to remain at multi-year lows in the near term, said CRU analyst Craig Lang.

LME aluminium, which has been supported by worries about the potential of sanctions hitting Russian supply, slipped 0.2% to $3,208 a tonne. The premium on LME cash aluminium over the three-month contract rose to $51.25 a tonne by Monday’s close for its highest since July 2018, indicating tightening nearby supplies. It retreated to $28 on Tuesday.

LME zinc gained 0.5% to $3,592.50, nickel added 0.4% to $23,260, lead advanced 0.6% to $2,300.50 and tin rose 0.5% to $43,500. MMG Ltd plans to ramp up production to normal levels at its Las Bambas copper mine in Peru after a group of local communities agreed to a 45-day truce with the government over protests and road blockades that had halted output.

China’s January copper cathode output from major smelters fell 7.49% from the prior month due to maintenance and the holiday season, state-backed research house Antaike said.