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Markets

Copper firm on supply concern, but dollar weighs

  • Benchmark copper on the London Metal Exchange traded up 0.1% at $9,077.5 a tonne in official rings.
  • Copper and other base metals have struggled to find clear direction in the last few weeks thanks to macro market jitters and the bond market tantrum which caused consternation in cross-asset markets.
Published March 18, 2021

LONDON: Copper prices held firm on Thursday on worries about supplies fuelled by shortages of concentrates, but gains were limited by a higher dollar and spiking US Treasury bond yields.

Benchmark copper on the London Metal Exchange traded up 0.1% at $9,077.5 a tonne in official rings.

Prices of the metal, used as a gauge of economic health by investors, touched $9,617 a tonne in February, the highest since August 2011 and up more than 15% since the start of the year.

"Copper and other base metals have struggled to find clear direction in the last few weeks thanks to macro market jitters and the bond market tantrum which caused consternation in cross-asset markets," said ING analyst Weny Yao.

CONCENTRATES: Extremely tight copper mine supply has pushed spot treatment charges for concentrates to their lowest in more than a decade, with three sources reporting miner-trader deals of less than $20 a tonne in recent tenders.

"Focus will be on whether those depressed margins could translate into smelter curtailments and refined production losses," ING's Yao said.

DOLLAR: A rising US currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand.

INVENTORIES: Rising stocks of copper in LME registered warehouses are weighing on sentiment. They are up more than 40% at 106,425 tonnes since the beginning of March.

Copper stocks monitored by the Shanghai Futures Exchange stand at six-month highs of 171,794 tonnes.

Higher availability has narrowed the premium for the cash over the three-month contract to around $9 a tonne from levels above $60 in late February.

TIN: Worries about supplies of the soldering metal have been reinforced by two companies holding large numbers of warrants - title deeds to metal.

The premium for the cash over the three-month has flared out again and is now above $2,000 a tonne.

Three-month tin gained 0.8% TO $25,950 a tonne.

OTHER METALS: Aluminium was little changed at $2,226.5, zinc slipped 0.4% to $2,814.5, lead added 0.1% to $1,922 and nickel fell 0.1% to $16,051 a tonne.

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