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Copper clings to gains as factory activity points to global economic recovery

  • Benchmark copper on the London Metal Exchange was barely changed at $10,240 per tonne .
  • Copper, mainly used in the power and construction industries, is seen as a sensitive gauge of the health of the global economy.
Published June 1, 2021

LONDON: Copper prices held on to gains on Tuesday amid signs higher demand from China and Europe where manufacturing activity picked up in May, while potential supply disruptions also supported.

Benchmark copper on the London Metal Exchange was barely changed at $10,240 per tonne by 1100 GMT after a choppy early session.

Manufacturing in Europe expanded at record pace in May while factory activity in top metals consumer China expanded at the fastest pace in a year in May due to booming domestic demand.

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

"You have very favourable fundamentals in metals, with economies opening up again and demand rebounding," said independent consultant Robin Bhar, adding that prices could consolidate for a period of time.

But some analysts warned that copper, which rocketed to a record of $10,747.50 in May, had risen too far and a pullback was warranted.

"I'm surprised that copper hasn't corrected further and longer. A correction is strongly needed," said Commerzbank analyst Daniel Briesemann.

PREMIUMS: The Yangshan copper premium sank to a record low of $32 a tonne, indicating weakening demand for imported metal into China.

SUPPLY: A strike by workers for BHP's Escondida and Spence copper mines in top producer Chile entered its fifth day on Monday, as the union awaited a decision by labor authorities over whether substitute workers the company called in are legal.

FOREX: A weaker dollar makes greenback-priced metals cheaper to holders of other currencies.

PRICES: LME aluminium rose 0.5% to $2,495 a tonne, zinc advanced 0.3% to $3,069, lead shed 0.4% to $2,194, tin lost 0.1% to $30,710 while nickel increased 0.8% to $18,255.

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