Copper supported by low stocks and weaker dollar

By Pratima Desai

LONDON, Aug 25 (Reuters) – Copper prices rose on Tuesday supported by historically low inventories in London Metal Exchange registered warehouses and a weaker dollar, but gains were limited because of uncertainty about demand prospects.

Benchmark copper on the London Metal Exchange was up 0.3% to $6,533 a tonne at 1600 GMT.

Prices of the metal used widely in the power and construction industries have traded around the $6,500 level since the middle of July.

“Copper is in a situation where the market needs to figure out where the balance is heading in the sense that we have seen extremely strong demand from China,” said Julius Baer analyst Carsten Menke.

“We also need to know how much of that demand is actually being consumed and how much is restocking.”

DOLLAR: A weaker U.S. currency makes dollar-denominated metals cheaper for consumers using other currencies, which could boost demand. It could also increase costs for producers in other currencies that are appreciating against the dollar.

“Dollar weakness is cyclical not structural and it is primarily against the euro,” Menke said.

“Emerging market currencies are still weak against the dollar and you can’t say costs in those metal producing countries will rise.”

INVENTORIES: Stocks of copper in LME warehouses have tumbled <MCUSTX-TOTAL> to 14-year lows at 95,525 tonnes and compare with a number above 250,000 tonnes in May.

Worries about copper supplies on the LME market have since the start of July created a large premium for the cash over the three-month contract <MCU0-3>.

It rose to $25 a tonne in late July and closed at $18 a tonne.

NICKEL: Three-month nickel earlier touched $14,995, the highest since November last year, on worries about supplies for China’s stainless steel mills.

“Recently nickel laterite ore prices have been continuously rising amid declining inventories at Chinese ports,” ING analysts said in a note.

“Stainless steel margins have also improved recently, which should be supportive for nickel demand.”

OTHER METALS: Aluminium was up 0.2% at $1,775 a tonne, zinc gained 1.3% to $2,478, lead rose 0.7% to $1,994, tin climbed 0.5% to $17,390 and nickel advanced 0.3% to $14,975.

(Reporting by Pratima Desai Editing by Jane Merriman)

adverts.addToArray(“pos”:”inread_player”)Advertisement

If you loved this information and you would love to receive much more information relating to stainless steel profile i implore you to visit our own web-site.

Leave a Reply

Your email address will not be published. Required fields are marked *