Copper under pressure despite China factory rebound

• Benchmark copper on the London Metal Exchange (LME) was up 0.1% at $5,207.50 a tonne at 1115 GMT but more than 1% lower this week.
• "Rallies are difficult to sustain because the facts are grim," said Robin Bhar, an independent consultant. "The worst is behind us, but we're not back to normal."
• Prices have recovered somewhat as China, the biggest consumer, has reopened, but other parts of the world remain in lockdown.

LONDON: Copper prices edged higher on Friday after data showed a rebound in Chinese factory activity, but were still headed for a weekly loss as growing stockpiles and dire economic indicators outside China suggest demand for metal will struggle to recover.

Benchmark copper on the London Metal Exchange (LME) was up 0.1% at $5,207.50 a tonne at 1115 GMT but more than 1% lower this week.

"Rallies are difficult to sustain because the facts are grim," said Robin Bhar, an independent consultant. "The worst is behind us, but we're not back to normal."

Copper fell around 30% from mid-January to mid-March, hitting a four-year low of $4,371 as the coronavirus spread across the globe, shutting industry.

Prices have recovered somewhat as China, the biggest consumer, has reopened, but other parts of the world remain in lockdown.

CHINA:

China's industrial production climbed 3.9% in April from a year earlier - the first rise this year and faster than the 1.5% increase forecast in a Reuters poll.

CHINA OUTPUT:

China's output of 10 nonferrous metals - including copper, aluminium, lead, zinc and nickel - rose to 4.93 million tonnes in April, up 3.8% year-on-year.

PREMIUMS:

Chinese Yangshan copper import premiums have risen to an 18-month high of $110 a tonne from $55 in February, suggesting rising appetite for foreign metal.

OIL/MARKETS:

Global share prices rose and oil prices jumped more than 3% to more than one-month highs.

EUROPE:

The euro zone economy saw its deepest contraction on record in the first three months of the year.

US:

An already-dismal near-term US economic outlook has darkened further in the latest Reuters poll of economists.

TRUMP/CHINA:

US President Donald Trump said he could cut ties with China.

STIMULUS:

Trump said this week he was open to negotiations on another possible stimulus bill. China also acknowledged the need for more fiscal stimulus for its economy.

STOCKS:

Copper stocks in LME-registered warehouses rose 30% this week to 278,750 tonnes, the highest since October.

Inventories in Shanghai Futures Exchange (ShFE) stores increased 2.3% to 208,890 tonnes, but are down from a peak of just over 380,000 tonnes in March.

ShFE lead stocks climbed 12% to 7,211 tonnes, the first rise in nearly three months, while aluminium inventories fell 9.4% to a three-month low of 352,342 tonnes.

AURUBIS:

Aurubis, Europe's largest copper producer, said production at all its sites was at a good level in the most recent quarter.

OTHER METALS:

LME aluminium was down 0.3% at $1,470.50 a tonne, zinc was 0.4% lower at $1,949, nickel fell 1.5% to $11,890, lead lost 0.8% to $1,605.50 and tin was up 0.5% at $15,100.

All were heading for weekly losses.