SINGAPORE, Aug 8: London copper hit its highest in nearly two months on Thursday after trade data suggested China’s economy is stabilising, while stronger-than-expected copper imports fanned earlier short-covering gains spurred by a weak dollar.
A rebound in China’s exports in July offered hope that the world’s second-largest economy may be finding its feet after a slowdown that has prompted the government to shore up activity.
‘Markets are near record shorts in copper so after positive news in China’s trade data, we could see copper prices finally break out from the recent trading range, but I don’t think it will be sustained,’ said Natalie Rampono at ANZ in Melbourne.
‘We’re in the seasonally slower months for demand, so we’re still expecting a bit of near-term weakness,’ she said, adding markets may well be preempting the expected seasonal fourth-quarter recovery in demand.
ANZ sees prices averaging $7,330 in December, and closing the year around $7,500 a tonne.
Three-month copper on the London Metal Exchange rallied to $7,152 a tonne, its highest since June 17 before edging back to $7,127 a tonne as of 0407 GMT.
The most-traded November copper contract on the Shanghai Futures Exchange climbed 3.1 percent to 51,520 yuan ($8,400) a tonne.
The dollar crumbled to seven-week lows on Thursday, triggering off a volley of short-covering in metals, traders said.
On demand, China’s imports of copper rose 8.1 percent to 410,680 tonnes in July from 379,951 tonnes in the previous month, data from the General Administration of Customs showed.
‘Scrap has been tight and you’ve got steady demand and quite a bit of surplus material has been locked up in LME warehouses,’ said Matthew Wonnacott, a consultant with CRU in Beijing.
‘The market has tightened up quite a bit over the end of July, start of August. As long as the premiums stay high, China is going to be an attractive place to send material, but that will depend how much surplus material is around.’
Premiums for copper in bond rose to $210 on Thursday from $205 on Wednesday, according to China metals price provider Shmet, around the highest in four years.
(AGENCIES)
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