Copper prices up

25 May, 2021

LONDON: Copper prices rose on Monday as a softer dollar spurred modest purchases, but gains were capped by concerns over price curbs on industrial metals in top consumer China.

Benchmark copper on the London Metal Exchange (LME) was up 0.6% to $9,939 a tonne at 1600 GMT.

However, prices of the metal, used widely in the power and construction industries, are down 8% since touching a record high of $10,747.50 a tonne this month.

“The dollar is giving some support to copper, but overall the mood is negative,” a metals trader said. “Still, the market did need a breather and consolidation.”

China’s market regulators warned industrial metal companies to maintain “normal market order” during talks on the significant gains in metals prices this year.

The Beijing government also said last week that it would manage “unreasonable” price increases for commodities such as copper, coal, steel and iron ore.

“If metal prices start rising again we could see the imposition of formal price controls on certain industries, coupled with limits on futures trading,” said ED&F Man Capital Markets analyst Edward Meir.

“In such a hyper-charged regulatory environment, Chinese funds must be thinking twice about initiating aggressive long positions and are likely paring the length they already have on the books.”

A lower US currency makes dollar-denominated metals cheaper for holders of other currencies, which could potentially boost demand.

Some concern about supplies on the LME market has narrowed the discount for cash copper over the three-month contract to about $14 a tonne from $28 last week.

Supporting copper is political uncertainty in Peru and top producer Chile.

An overhaul of Chile’s market-orientated constitution is under way and the country is debating whether to increase royalties on miners.

Peru, the No. 2 producer, is heading for a polarised June presidential election. Leading in the polls is a little-known socialist who wants to redistribute mining wealth.

Aluminium gained 0.9% to $2,392 a tonne, zinc fell 0.8% to $2,947, lead ceded 2.4% to $2,136, tin slipped 0.1% to $29,490 and nickel rose 2% to $17,125.

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