LONDON: Copper hovered near 10-week highs on Thursday but weak Chinese manufacturing data and a stronger dollar weighed on prices.
Three-month copper on the London Metal Exchange (LME) was flat at $8,419 a metric ton in official open outcry trading.
Prices of the industrial metal touched $8,500 a ton on Wednesday, their highest since Sept. 15. Copper is on track for its first month of gains since July. Chinese manufacturing activity contracted for a second straight month in November, raising questions over the effectiveness of Beijing’s economic stimulus policy.
Daniel Smith, head of research at Amalgamated Metal Trading, said the divergence between copper prices and other LME metals, is because of seasonal factors. “There is clear seasonal upswing for copper from mid-November to February,” Smith said. On the supply side, contracts of employees at a Panama copper mine that accounts for 1% of copper supply have been suspended.
Smith expects copper to head towards $8,860 if it manages to sustain levels above key resistance at $8,500. The massive demand boom for industrial metals from green energy is topping out in term of growth rates while weakness in China’s property sector will also weigh on demand, Smith added.
Healthier near-term demand for copper has narrowed the discount for cash metal over the three-month contract to about $88 a ton from 31-year highs above $100 only two days ago.
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