LONDON: Copper prices were supported on Tuesday by new funding to boost the Chinese housing market while the dollar softened as the market awaited inflation data from the United States.
US inflation numbers due later on Tuesday could determine the course of interest rates and the US currency, which can affect demand for dollar-priced metals. Benchmark copper on the London Metal Exchange (LME) was little changed at $8,173 a metric ton in official rings. It has traded in a narrow $400 range since the start of October owing to a lack of strong fundamental signals.
China is planning to provide at least 1 trillion yuan ($137.2 billion) of low-cost financing to the nation’s urban village renovation and affordable housing programmes, Bloomberg News reported. It is the world’s largest copper consumer.
“Some optimism about China’s housing market and the dollar are helping, but fundamentally not much has changed,” one metals trader said. “A raft of data from China tomorrow could change the status quo.” Weak demand and expectations of copper surpluses this year are behind a 15% drop since January and the discount for cash copper over the three-month contract trading at 31-year highs around $89 a ton. Chinese investment, house prices and industrial production data for October is due on Wednesday.
“China’s economic recovery is certainly rather gradual and bumpy,” Citi analysts said in a note. “However, its relative strength, mainly coming from the manufacturing sector, versus many parts of the world ex-US, could mean that China could provide stability amid weaker growth prospects outside of the US” On the technical front, copper is supported at the 50-day moving average around $8,140, while attempts on the upside face resistance at $8,285, the 100-day moving average. In other metals, zinc fell 0.2% to $2,548, lead slipped 0.4% to $2,162, tin rose 0.1% to $24,950 and nickel retreated 1.1% to $17,200.
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