Copper gained in London and Shanghai, supported by lower stocks and increasing net length while confirmations that Beijing had suspended its stockpiling created pressures on the metal.
China’s state reserves buying has helped drive London copper prices up 66 per cent this year. But Beijing said it had stopped buying after prices surged and middlemen cashed in on an initiative meant to support domestic industry, a senior government official was quoted as saying yesterday.
Although the copper demand outlook is expected to be soft over the summer – the traditional low season – inventories in warehouses registered with the London Metal Exchange continue to fall, and open interest has increased in recent weeks thanks to the building of new long positions.
October-delivery copper on the Shanghai Futures Exchange, the most-active contract, gained 0.9 per cent to 40,740 yuan ($5,962) a metric tonne. The contract closed the day at 40,250 yuan, up 72 per cent this year. Three-month delivery copper on the London Metal Exchange climbed 1.8 per cent to $5,125 a tonne before trading at $5,110 a tonne. The metal is up 66 per cent this year, heading for its steepest six-month increase since the first half of 2006. Copper for September delivery in New York added 0.5 per cent to $2.3215 a pound.
For the moment, bullish bets look to be on the money with London copper heading for a 26 per cent rise in the second quarter, after gaining 32 per cent in the first three months of the year.
“In the short term, copper may still move up to test previous highs, but the attempt is only supported by technical indicators, such as falling stocks ,” said Zeng Chao, an analyst with Everbright Futures.
Some question whether the strength in copper could be sustained, given uncertainties over the global economy.
“I think there will be very limited movement in prices this week until we see the data,” said David Moore, commodities strategist at the Commonwealth Bank.
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