Copper rebounds on short-covering and receding China concerns

LONDON: Copper rebounded after three days of losses as some bearish investors cancelled their positions, partly because of receding concerns over tight liquidity in top metals consumer China.

China last week refrained from making its usual liquidity injections, but a central banker said in an article seen on Wednesday that liquidity would remain ample.

Investors are expecting China to cool credit growth and scale back fiscal stimulus this year to help to stabilise debt.

"The market has been trying to come to terms with that cash squeeze we saw in China last week, but there are some signs now that the squeeze has eased," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"The market is pausing, trying to gauge whether we've hit a peak in terms of Chinese activity and demand after that massive injection of stimulus into the economy last year."

Three-month copper on the London Metal Exchange (LME) had added 0.7% to $7,833 a tonne by 1545 GMT.

Some investors bought copper to cancel their short positions after it held above a technical support area at $7,675-$7,700, Hansen added.

Wednesday's LME options expiry also played a part, broker Marex Spectron said in a note.

• Zinc was the biggest LME gainer, rising 1.4% to $2,605 a tonne after LME on-warrant inventories fell by about 4%.

  • The premium of LME cash tin over the three-month contract extended gains to a record peak of $1,750 a tonne on Tuesday due to tight supply of LME inventories, which have tumbled by 82% over the past three months.

Benchmark LME tin, supported recently by a military coup in major producer Myanmar, slipped 1.4% to $22,670 a tonne after hitting its highest since June 2014 on Tuesday.

• LME aluminium edged up 0.1% to $1,973.50 a tonne, nickel shed 0.3% to $17,645, while lead rose 0.6% to $2,027 after touching a two-week low of $2,001.