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LME Copper Stays Range Bound as Investors Eye Next Cue

4 Aug 2020 9:49 am
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Mumbai (Commodities Control) – London copper eased on Tuesday, having moved in a narrow range for weeks, as investors weighed between bullish and bearish factors following a strong rally in the past few months.

Three-month copper on the London Metal Exchange fell 0.3% to $6,473.50 a tonne by 0209 GMT. The contract moved in a tight range of less than 1% in each of the past three weeks after surging 52% in four months to a two-year high in July.

Shanghai base metals were mostly lower on Tuesday, failing to hold onto overnight gains. Nonferrous metals on the LME were mixed.

LME aluminium fell 0.5% to $1,743.50 a tonne, zinc declined 0.8% to $2,306 a tonne. ShFE aluminium rose 1% to 14,735 yuan a tonne, a 27-month high, while nickel jumped 1.6% to 111,140 yuan a tonne.

Escalating U.S.-China tensions, supply continuity from Chile, resurgence of COVID-19 cases and seasonally weaker China demand kept a lid on further rallies.

However, prices have been supported by economic recovery in some countries, a weaker dollar and hopes of further U.S. stimulus package.

The most-traded copper contract on the Shanghai Futures Exchange rose 1.3% to 51,710 yuan a tonne, tracking overnight gains in London.

The front-month ShFE copper contract was traded at a 60-yuan discount to the second-month contract, suggesting that nearby supply tightness has eased, after ShFE inventories rose to the highest since May 22 at 159,513 tonnes.

China's July excavator sales jumped over 40% year-on-year, the Shanghai Securities News reported, indicating a strong construction sector that also consumes metals. Construction machinery demand could stay solid for the rest of 2020, it said.

Nonferrous metals on the SHFE, except for zinc, cruised higher in overnight trading. Copper jumped 1.33%, aluminium surged 1.51%, nickel increased 1.52%, tin added 1.01% and lead edged up 0.19%. Zinc shed 0.45%.

Their counterparts on the LME were mixed on Monday. Copper increased 1.6%, aluminium surged 2.02%, lead advanced 0.27% and nickel added 1.06%, while zinc shed 0.13% and tin shriveled 0.14%.

Three-month LME copper is likely to move between $6,310-6,450/mt today. The September contract on ShFE is likely to trade between 51,600-52,000 yuan/mt today.

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