LONDON: Copper and other industrial metals pushed higher on Tuesday on hopes that top metals consumer China would unleash more stimulus to boost its economy.
Three-month copper on the London Metal Exchange was up 0.5% at $8,386 per metric ton by 1100 GMT after edging lower on Monday.
China’s cabinet on Monday pledged more fund injections in the capital market to stabilise market confidence. One option included mobilising about 2 trillion yuan to stabilise the slumping stock market, Bloomberg News reported.
“The speculation about life support to the stock market is aiding sentiment. It’s got the renminbi trading stronger and that’s feeding through to some better price action,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
Positive technical signals were also in place as copper has broken above both the 200-day moving average and a downtrend in place since Dec. 28, when it touched the highest in nearly five months, he added.
Focus on poor demand prospects weighs on copper
However, a trader said the metals price rally is unlikely to be sustained amid the absence of a stimulus package that directly pumps up metals consumption.
On the Shanghai Futures Exchange, the most-traded March copper contract advanced 0.2% to 68,110 yuan ($9,500.63) a ton.
Hansen said there was the prospect of a short-covering rally if copper made further gains after many speculators took bearish bets on the market over the past two weeks, many on the U.S. Comex market.
“All these shorts haven’t much to show for their efforts so that raises the prospect of some short-covering if we can break above the $3.80 level,” Hansen said.
U.S. Comex copper futures were up 0.6% at $3.79 a lb.
Also supporting the metals market was a softer dollar index, making greenback-priced metals less expensive to buy for holders of other currencies.
LME aluminium added 0.8% to $2,176.50 a metric ton, zinc climbed 1.8% to $2,500, nickel advanced 1.4% to $16,225, lead gained 1.2% to $2,149 and tin jumped 2.3% to $26,215.
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