Copper rangebound as investors navigate mixed market signals

BEIJING: Copper prices traded in a tight range on Tuesday, with traders staying cautious as mixed market signals cast a shadow on directions.

A stronger US dollar, with investors still closely monitoring prospects for the Federal Reserve’s rate cuts, remained a drag for the base metals complex, as it makes commodities priced in the greenback more expensive for buyers using other currencies.

But hopes of stronger seasonal demand in top consumer China lingered, supporting prices of the red metal used in power and construction sectors.

The most-traded copper contract on the Shanghai Futures Exchange dipped 0.13% to 78,920 yuan ($10,982.92) per metric ton, as of 0259 GMT.

Benchmark three-month copper on the London Metal Exchange, however, added 0.2% to $9,752.5 a ton.

Copper markets will be closely watching Thursday’s EU and US manufacturing Purchasing Managers Index (PMI) data releases, as softer prints would reinforce current demand concerns while any upside surprises could provide short-lived support, analysts at consultancy Benchmark Mineral Intelligence (BMI) said in a note.

China’s imports of refined copper remained weak due to unfavourable arbitrage between SHFE and LME warehouses, BMI analysts said, expecting the import premium to continue at a low level as domestic copper production keeps increasing.

Additionally, output in Peru, the world’s third-largest copper producer, rose 7.1% year-on-year in June, thanks to the robust increase at the MMG-controlled Las Bambas mines. However, China’s latest pledge to continue to boost consumption reignited demand hopes.

SHFE aluminium dipped 0.12%, nickel dropped 0.51%, tin fell 0.33% and zinc shed 0.65%, while lead advanced 0.21%.

LME aluminium fell 0.29%, nickel lost 0.57%, zinc ticked down 0.11%, while lead gained 0.36% and tin was little changed.