LONDON: Copper prices eased slightly on Tuesday after data showed stocks had risen on the London Metal Exchange while expectations of rate cuts in the United States and concern about possible disruption of supplies from Chile limited selling.
Benchmark copper on the LME traded 0.5% lower at $9,642 a metric ton in official rings from an earlier session high at $9,747.5 a ton. Copper stored in LME registered warehouses rose by 14,275 tons to a total of 153,850 tons, marking a gain of 70% since late June. Producers, consumers and traders typically put their surplus metal on LME warrant - a title document conferring ownership.
Traders say the copper delivered to LME warehouses is likely to have been produced in China, which is the world’s largest copper consumer, accounting for more than half of global consumption estimated at around 26 million tons this year. The market is also focused on Codelco’s El Teniente copper mine where operations were halted due to the death of six people after an earthquake last week.
El Teniente produced 356,000 tons of copper last year. Traders said the market impact would depend on the length of the stoppage, which was not yet clear. Surprisingly weak US jobs data last week triggered bets on Federal Reserve interest rate cuts from September causing the US dollar to weaken and making dollar-priced metals, such as copper, cheaper for holders of other currencies.
Strong technical resistance for copper is around $9,730 where the 21- and 50-day moving averages converge. Longer term, copper prices will depend on China’s demand. “Chinese buyers have sort of lived hand to mouth, they haven’t been drawing down stock.
At higher prices we did see them export some metal,” said Macquarie analyst Marcus Garvey. Garvey added the LME price will find a floor when Chinese buyers return to the market. Aluminium climbed 0.5% to $2,566 a ton, zinc added 0.6% to $2,767, lead was up 0.3% at $1,964, tin retreated 0.1% to $33,185 and nickel fell 0.8% to $14,950.
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