LONDON: Copper prices rebounded on Tuesday after news that China plans to boost stockpiles of copper and as risk sentiment rekindled among global investors.
Benchmark three-month copper on the London Metals Exchange gained 3.6percent to USD13,360 a metric ton in official open-outcry trading, having sunk to a three-week low in the previous session.
LME copper soared to a record peak of USD14,527.50 on Thursday, fuelled by speculative buying, then plunged 14.5percent from that high to an intraday low on Monday. “Today’s bounce is sending quite a strong signal that the underlying appetite for metal exposure has not suddenly suffered a sudden death,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“Also, that headline about China increasing their strategic copper reserves, that’s something the market likes to hear.” China will expand its strategic reserve of copper and explore building a commercial stockpiling system, an official from the state-backed China Nonferrous Metals Industry Association said on Tuesday. The most-active copper contract on the Shanghai Futures Exchange climbed 2.6 percent to close daytime trading at 104,500 yuan (USD15,066.54) a ton. Industrial metals joined gold and other financial markets in bouncing on Tuesday as investor sentiment picked up, partly due to a long-awaited trade deal between the United States and India.
Analysts were still cautious about copper, which has been facing weak demand and rising inventories. “I don’t feel that the current fundamentals are strong enough to justify a strong rebound, but if the speculative demand is strong enough, then prices can overshoot to the upside,” Hansen added.
LME aluminium gained 1.9percent in official activity to USD3,112.50 a ton, lead was up 0.7percent at USD1,976, nickel climbed 3.6percent to USD17,430, tin jumped 4.5percent to USD48,700, while zinc dipped 0.1percent to USD3,320.
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