Copper climbs for fourth session on weaker greenback, supply problems
LONDON — Copper prices advanced on Wednesday for the fourth straight session, bolstered by a weaker dollar and continuing supply problems, including stoppages at the world’s two biggest mines.
Three- month copper on the London Metal Exchange (LME) closed 0.80% higher at $5,865 a ton, adding to small gains from the previous session. Prices last week fell to their lowest level since Jan. 10 at $5,652 a ton.
“Dollar weakness seems to be giving support to metals today while supply disruptions in copper are persisting,” said Xiao Fu, head of commodity market strategy at Bank of China International in London.
The dollar index was slightly weaker ahead of an expected US interest rate hike later in the day, which would be the second in three months.
“We are positive about the coming months because the supply side will see increasing volatility and Chinese demand is still going to be quite healthy,” Mr. Fu added.
China’s Premier Li Keqiang reassured investors on Wednesday that the world’s second largest economy and top metals consumer was strong and not at risk of a hard landing following recent buoyant economic data.
DISRUPTIONS
Most analysts expect a copper market deficit for 2017 after prolonged disruptions at the world’s two largest copper mines, Grasberg in Indonesia and Escondida in Chile, even as the immediate disruption looks set to ease.
Escondida plans to restart operations after striking workers again rejected an invitation to return to negotiations.
A strike at Peru’s top copper mine, Cerro Verde, may end next week if the labor ministry declares it illegal, the head of the union said on Tuesday.
Zinc climbed 2.10% to end at $ 2,808 a ton after touching $ 2,816.50, the highest level in nearly two weeks. The price moved above resistance at Monday’s high of $ 2,783.50, said Alastair Munro at broker Marex Spectron, adding that Chinese buying had been supporting the market.
“Break through there and the $ 2,800 level should open up a move to $2,850/75,” he said in a note.
Tin edged down 0.50% to finish at $19,875 after a 2.70% rise on Tuesday.
Cash tin prices rose to a $60 premium to benchmark threemonth prices, compared to a discount of $ 25 at the start of the month, which may trigger more deliveries into LME warehouses.
Nickel closed down 0.20% at $10,205.
“The ( nickel) market finally moved into deficit in 2016 after four years of surplus and we expect it to remain in deficit,” Royal Bank of Canada analyst Fraser Phillips said in a note.
“However, with record- high inventory we believe the upside potential for prices is limited in the near term.”
Among other industrial metals, aluminum gained 1.50% to end at $1,887 and lead rose 1.10% to $2,248.50. —