LONDON: Copper edged higher on Tuesday as supply disruptions and interest rate cuts offset worries about high inventories and a sluggish global economy.
Benchmark three-month copper on the London Metal Exchange was a touch firmer at USD9,975 a metric ton in official open-outcry trading. “We have to deal with the disruptions that tighten mine supply, but against that we have inventory levels at the major exchanges showing a healthy increase, especially in the US,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“The US rate cuts last week added some positive sentiment, but we have to remember that rates are being cut from a position of weakness, not strength.” Production remains suspended at Freeport Indonesia’s Grasberg mine, one of the world’s biggest copper mines, following an incident in early September.
Inventories on the US Comex exchange surged earlier this year in anticipation of US tariffs and have continued to climb, reaching 318,285 short tons, up 241percent this year. LME copper has gained 13percent so far this year, but has retreated from its 15-month peak of USD10,192.50 touched last week.
“The question in the short term is whether the uptrend that we’ve seen since May will hold up. We need to hold above USD9,850 in order not to see a downside extension,” Hansen added.
In China, the most-traded copper contract on the Shanghai Futures Exchange closed daytime trading down 0.3 percent at 79,930 yuan (USD11,237.80) per ton. Some traders closed long positions after SHFE prices closed above the key psychological level of 80,000 yuan per ton on Monday, according to a Singapore-based hedge fund analyst who spoke on condition of anonymity.
Nickel was the best LME performer in official activity on Tuesday, rising 0.3 percent to USD15,260 a ton after top producer Indonesia suspended 190 coal and mineral mining permits.
Among other metals, LME aluminium shed 0.2 percent to USD2,639.50 a ton, zinc slipped 0.6 percent to USD2,875.50, lead dropped 0.5 percent to USD1,988 and tin gave up 0.3percent to USD33,900.
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