LONDON, July 3 (Reuters) – Copper prices firmed on
Monday as hopes for economic stimulus in top consumer China were
raised by slowing activity in the country’s industrial sector
while sliding inventories suggested a tighter market.
Benchmark copper on the London Metal Exchange (LME)
was up 0.32% at $8,331 a metric ton at 0924 GMT. Prices of the
metal used in the power and construction industries dropped to a
four-week low of $8,141 last week.
Surveys of purchasing managers in China’s manufacturing
sector suggest that the world’s second-largest economy lost
momentum in the second quarter as demand weakened.
“Chinese industrial activity seems to be stalling. The
market is hoping the government will do more in terms of
stimulus,” one metals trader said, adding that volumes would be
subdued because of a U.S. holiday on Tuesday.
Supporting copper prices are inventories in LME-registered
warehouses that have fallen 30% since June 6 to stand at 69,700
tons
Cancelled warrants – metal earmarked for delivery – at 50%
of the total suggest more copper is due to leave the LME system.
This and large holdings of copper warrants – title documents
conferring ownership – have fuelled concern about availability
in the LME system and created a premium for cash copper over the
three-month contract
On the technical front, resistance on the upside for copper
comes in at about $8,375, $8,410 and $8,425, where the 50-day,
21-day and 200-day moving averages currently sit.
Elsewhere, large holdings of lead warrants and significant
holdings of long futures positions have raised concerns about
supplies on the LME market and created a premium for near-term
contracts over those with long maturities.
The premium for the cash lead contract over the three-month
contract
fell 0.4% to $2,091 a tonne.
More generally, industrial metals have come under pressure
from a stronger U.S. currency, which makes dollar-priced
commodities more expensive for holders of other currencies.
Aluminium slipped 0.4% to $2,142 a metric ton, zinc
retreated 0.9% to $2,366, tin was up 0.5% at
$26,930 and nickel ceded 0.5% to $20,415.
(Reporting by Pratima Desai
Editing by David Goodman)
Read More: China stimulus hope and falling inventories buoy copper