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Markets

Copper edges higher as China recovery stays the course

  • The metal has gained about 50% since March and is the best performer this year among base metals.
09 Sep, 2020

LONDON: Copper rose on Wednesday as Chinese producer prices fell at their slowest pace in five months, pointing to continued economic recovery in the world's top metals consumer and better demand.

Benchmark copper on the London Metal Exchange (LME) rose 0.2% to $6,681 per tonne in official trading, after shedding 1.8% in the previous session.

The metal has gained about 50% since March and is the best performer this year among base metals.

"The expectations of higher demand from China are still alive and the recovery is on track," said ING analyst Wenyu Yao, adding that low inventories of copper in LME-registered warehouses were underpinning prices.

China, which accounts for half of global copper demand, returned to growth in the second quarter of the year and imported a record amount of copper in July.

INVENTORIES: Headline stocks of copper on the LME shed 3,125 tonnes to 73,425 tonnes, the lowest since November 2005. In warehouses monitored by the Shanghai Futures Exchange, stocks are at their highest since May.

The shortages on the LME have pushed up the premium for the cash over the three-month copper contract to $23.50, close to the highest since March last year.

NICKEL: China's August refined nickel output rose 15% from a year earlier to 14,260 tonnes, Antaike, the research arm of the country's nonferrous metals association, said on Wednesday.

TRADE TENSIONS: Helping to limit gains was a survey that revealed concerns by U.S. companies in China that the U.S.-China trade tensions will drag out for years. Nearly a third said their ability to retain staff had been affected.

The long-standing trade tensions have weighed on metals prices. On Monday, President Donald Trump raised the idea of separating the U.S. and Chinese economies.

PRICES: LME aluminium shed 0.8% to $1,777.50 a tonne, zinc eased 0.2% to $2,412, lead gained 0.6% to $1,915.50, tin shed 0.5% to $17,960 and nickel lost 0.2% to $14,853.

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