LONDON: Copper prices edged higher on Tuesday on hopes that top metals consumer China would roll out more measures to stabilise its economy and stock markets, but weak demand curbed gains.
Three-month copper on the London Metal Exchange was up 0.1% at $8,565 per metric ton in official open-outcry trading after making modest gains on Monday.
Investor confidence in China was hit by a liquidation order for debt-laden developer China Evergrande, which laid bare the depths of the country’s real estate downturn. “We’ve seen renewed weakness both in Hong Kong and mainland China in the stock markets and that’s a signal that the confidence that is needed is not there,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“Copper is holding up mostly in anticipation of additional support from the Chinese government.”
LME copper has gained 4% since touching a six-week low on Jan. 18 partly on worries over supply due to mine disruptions, forcing analysts to change their forecasts to deficits for this year instead of surpluses.
“The market was caught quite short last week, but most of the shorts have been covered. Whether we’re going to see some fresh longs in the market depends on what happens in China,” Hansen added.
The discount of cash LME nickel to the three-month contract rose to $262 a tonne, the highest since last October, indicating healthy supplies of the metal. Analysts expect global surpluses of the metal this year due to rising production in Indonesia.
LME benchmark nickel dropped 0.5% to $16,350 a ton. In other metals, LME aluminium was flat in official activity at $2,264.50 a ton, lead slipped 0.5% to $2,162 and tin shed 0.7% to $26,150, while zinc added 0.2% to $2,556.
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