Copper claws higher on physical demand, but jittery on rates

LONDON: Copper prices marched higher for a third session on Tuesday on signs of a rebound in physical demand, but gains were capped by uncertainty ahead of a US central banking conference.

Three-month copper on the London Metal Exchange gained 0.4% to $9,305.50 a tonne in official trading, building on two previous sessions of gains, including a 2.6% rise on Monday.

"The market is suddenly looking stronger, we have buyers out there for the physical stuff, not just the financial players," said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.

"But it's pausing a bit today. Before we know whether we'll see a strong return of investment demand, we need to get past Friday and Jackson Hole, that's the next crucial event risk."

Markets are awaiting more signals on stimulus tapering from the head of the US Federal Reserve Jerome Powell, who is due to make a speech on Friday at the Jackson Hole meeting of central bankers.

Copper rebounds, but demand concerns dominate market

The comments are likely to set the direction of the dollar, which has a big impact on copper and other commodity markets.

The dollar index was slightly firmer on Tuesday, making greenback-priced metals more expensive to holders of other currencies.

The most-traded October copper contract on the Shanghai Futures Exchange closed up 1.5% at 68,560 yuan ($10,582.86) a tonne.

Signs of renewed physical demand for copper included China's Yangshan premium, which has more than doubled this month to $122.50 a tonne.

LME on-warrant inventories have slid by a fifth over the past two days while the premium of LME cash copper over the three month contract has jumped to $27.95 a tonne, the strongest since April, indicating more demand for near-term supplies.

Prices for aluminium raw material alumina have hit their highest in almost six months after a blaze at the Jamalco refinery in Jamaica led to fears of tighter supply.

LME aluminium rose 1% in official activity to $2,627 a tonne, zinc gained 1.8% to $2,981, lead was little changed at $2,284, nickel climbed 0.9% to $19,063 and tin advanced 1.6% to $32,703.