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LME Copper Sheds Early Weakness To Rise On Sino-U.S. Deal Optimism

13 Jan 2020 12:44 pm
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Mumbai (Commodities Control) – Copper prices rose on Monday, ahead of a signing of the U.S.-China Phase 1 trade deal later in the week, although gains were limited as investors exercised caution in the run-up to macro data announcement from top metals consumer China.

Benchmark three-month copper on the London Metal Exchange (LME) rose 0.4% to $6,222.50 a tonne by 0442 GMT, extending its gains to a sixth straight session. The contract rose 5.3% last month on expectation of the trade deal.

"Looking beyond all short-term volatilities, the overall trend is that China's economy is improving. But base metals are not really moving much as people just want to wait for more developments on the macro front," said Argonaut Securities' analyst Helen Lau.

In China, the most-traded copper contract on the Shanghai Futures Exchange (ShFE) dipped 0.1% to 48,910 yuan ($7,087.48) a tonne.

The rest of the base metal complex was range-bound as investors sought more details from the trade agreement and awaited macro-economic data from China.

"If the data from China this week is good and stable, it may support copper prices to go higher again," Lau said, expecting London copper prices to surpass $6,200 a tonne on improving demand.

Global automakers are cautious about their prospective sales in China's vehicle market this year, the world's biggest, as pressures such as slowing economic growth and trade frictions look set to continue.

China will not make significant cuts to subsidies for new energy vehicles this year, signalling that its policy will remain relatively stable, state media quoted the country's industry ministry as saying on Saturday.

China's yuan made five-month highs day amid heavy demand ahead of the U.S.-China trade deal that includes clauses against competitive devaluations while seasonal dollar-selling by Chinese companies also helped fuel the yuan's rise.

LME aluminium declined 0.2% to $1,802 a tonne, zinc eased 0.1% to $2,375.50 a tonne, lead fell 0.3% to $1,926.50 a tonne, while nickel rose 0.5% to $14,265 a tonne.

ShFE aluminium dropped 0.9% to 13,945 yuan a tonne and zinc lost 0.2% to 18,285 yuan a tonne. Nickel was up 1.2% at 113,060 yuan a tonne and lead advanced 0.1% to 14,995 yuan a tonne.

(Commodities Control Bureau +91-22-40015502)

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