LONDON: Copper prices climbed on Monday after Reuters reported that China’s state banks acted to stabilise a sliding offshore yuan, traders said, but disappointment with China’s latest package of measures to boost growth capped gains.
Three-month copper on the London Metal Exchange (LME) was up 0.4% at $8,274 per metric ton at 1520 GMT after three consecutive weeks of losses on concerns about sluggish growth and demand in China and elsewhere.
Metal traders said China’s intervention in currency markets was behind the reversal in prices of other industrial metals including aluminium, zinc and lead. China’s major state-owned banks were seen actively mopping up the offshore yuan, three people with knowledge of the matter said, as the currency comes under growing pressure from a darkening economic outlook and strain in the property sector.
Copper used widely in the power and construction industries has also come under pressure from higher inventories in LME approved warehouses. At 95,325 tons they have climbed 76% since July 12. Elsewhere, traders noted a large holding of lead warrants, which has fuelled concern about near-term supplies of lead on the LME market. This has created a premium or backwardation for the cash lead contract over the three-month contract.
Earlier on Monday, the premium at $18.50 a ton is the highest since early July and compares with a discount only a week ago. Three-month lead gained 0.7% to $2,164 a ton.
In other metals, aluminium rose 0.3% to $2,144 a ton, zinc advanced 0.7% to $2,318, tin was up 1.4% to $25,150 and nickel added 0.6% to $20,225.
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