Copper prices supported by strong Euro factory data

LONDON: Copper prices rose on Wednesday as high activity levels in European factories overshadowed fears that rising coronavirus infections will stymie demand for metals and delay economic recovery.

Benchmark copper on the London Metal Exchange (LME) was up 0.3% to $9,004 a tonne at 1240 GMT, after easing in early trade.

Euro zone economic activity made a surprise return to growth this month as factories ramped up production to the fastest pace in over 23 years, but a third wave of coronavirus infections has raised concerns over the economy going forward.

Copper, used in the power and construction industries, is also seen as a gauge for the health of global economy.

Alastair Munro at brokerage Marex Spectron said copper benefited from positive Euro PMI data, as well as a bounce in crude oil prices.

POSITIONING: Speculative long positions continued to decline, according to brokerage Marex Spectron, with the LME net speculative long last at 33% of open interest compared to a multi-year high of 62% touched last month.

STOCKS: Inventories of copper in warehouses registered with the LME have jumped to 129,950 tonnes, the highest since December, compared to 74,000 tonnes on Feb. 3. This has eased concerns over supply availability.

Visible stocks of copper on other exchanges have also climbed.

SPREADS: The premium of the LME cash copper contract over the three month contract has been erased, after it touched $62 a tonne in February.

DOLLAR: Investors in search of a safe-haven pushed the US dollar to a four-month high reflecting fears that extended lockdowns in Europe would delay a global economic revival. Potential US tax hikes and higher Sino-US tensions also boosted the dollar.

SUPPLY: Freeport-McMoRan Inc will sign a $2.8 billion deal with China's Tsingshan Holding Group on March 31 to build a copper smelter in Indonesia's Weda Bay.

OTHER METALS: LME aluminium was up 1.4% at $2,251 a tonne, zinc fell 0.2% to $2,833, lead gained 1.1% at $1,972 and tin was down 2.3% at $25,305, nickel added 0.3% at $16,200.