MELBOURNE, Mar 17: London copper was little changed on Tuesday as a weaker dollar cushioned prices that have been undermined by a slow recovery in Chinese demand after last month’s Lunar New Year.
But appetite for copper should increase due to China’s investment plans for its national grid, given that power cable is a major use for the conductive metal, said Chunlan Li of minerals consultancy CRU in Beijing.
‘That does not necessarily mean you will end up with 21 percent growth, but it suggests the grid company is trying to spend more this year … We expect the market to tighten up in the second half because demand is going to recover further and supply growth is expected to be lower then,’ Li said. The president of China’s state power grid company vowed during the recent party congress to boost investment in power infrastructure this year.
Three-month copper on the London Metal Exchange traded little changed at $5,847.50 a tonne by 0302 GMT after closing nearly flat in the previous session.
Prices have been trapped in a range from 5-1/2-year lows below $5,400 a tonne hit in January to just shy of $6,000 in early March.
Copper touched $5,900 a tonne on Friday, the loftiest since March 3, as traders looked for stronger demand to emerge from top consumer China after last month’s Lunar new year. ‘There’s some demand recently, but from trading houses only,’ said a physical trader in Singapore. The most-traded May copper contract on the Shanghai Futures Exchange was also steady at 42,640 yuan ($6,814) a tonne. Bonded Shanghai copper premiums dropped $5.50 to $85-$100, reflecting the slow physical demand.
CRU estimates bonded stocks in China climbed by 20,000 tonnes over February to 620,000 T this week. The euro stood firm after soft U.S. data and edginess ahead of this week’s Federal Reserve policy meeting dented the dollar’s rally and helped the common currency pull away from 12-year lows. The Fed is scheduled to begin its two-day policy meeting later on Tuesday, and many analysts had expected the central bank to drop the word ‘patient’ from its formal statement on the timing of its first interest rate increase since 2006. But downbeat data on U.S. manufacturing, industrial output and housing on Monday offered the Fed a reason to toe a cautious line on policy.
(AGENCIES)
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