SINGAPORE, May 29: London copper drifted on Wednesday, as a slightly firmer dollar dragged on prices while seasonally strong demand from top consumer China offered support.
Surging consumer confidence and an improving housing sector in the United States pushed the greenback higher, dampening appetite for dollar-denominated assets from holders of other currencies.
Three-month copper on the London Metal Exchange had edged down 0.19 percent to $7,308 a tonne by 0201 GMT, erasing most of the previous sessions’ small gains.
Copper prices have recovered 8 percent from the year’s low below $6,800 a tonne hit last month, but have been trapped in a broad $7,100-$7,500 range since early May. Prices are down nearly 8 percent for the year.
The most-traded September copper contract on the Shanghai Futures Exchange climbed 0.76 percent to 52,700 yuan ($8,600) a tonne.
Chinese copper demand is at its strongest in the second quarter, after the Lunar New Year break and before factories wind down over summer, said Chunlan Li, an analyst at metals consultancy CRU in Beijing.
‘It’s still peak demand season in China, but as the weather gets hotter, maybe from July, demand for copper tube for example, will slide a little,’ she said.
‘We haven’t seen such signals yet. We see strong price support below $7,000 a tonne. Copper prices are more related to macro factors for now.’
Meanwhile, a shortfall of scrap metal has crimped supply in China, pushing up local premiums and encouraging traders to import metal, shielding prices from the country’s growth slowdown.
China’s factory activity shrank for the first time in seven months in May, the flash HSBC Purchasing Managers’ Index showed. An official report is due on June 1.
Markets were also watching Indonesia for signs of a restart of the world’s second largest copper mine that could erode price support.
Freeport McMoRan Copper & Gold Inc has got government clearance to begin some production at the facility, two weeks after a tunnel collapse killed 28.
(agencies)
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