LONDON, Aug 12 – Copper rose on Wednesday as stock markets rallied, oil prices climbed and the dollar weakened, though lacklustre factory data in Europe fed concerns that demand will remain weak and the market oversupplied.
Benchmark copper on the London Metal Exchange (LME) was up 0.8% at $6,436.50 a tonne at 1616 GMT.
Prices touched a two-year high of $6,633 on July 13 as consumption in China, the biggest market, revived after coronavirus lockdowns were eased and traders worried the virus would disrupt mine production.
But with much of the world moving into recession and mine output holding up, some analysts think prices are too high.
“Copper is way ahead of the fundamentals,” said Eugen Weinberg, head of commodities research at Commerzbank. Prices should fall 10-15% from current levels, he said.
MARKETS: European and U.S. markets rose, with the S&P 500 moving towards a record high. Oil prices gained around 2% as U.S. oil inventories declined. The dollar weakened, helping metals by making them cheaper for non-U.S. buyers.
UNITED STATES: Consumer prices rose more than expected in July, but the White House and Congress remain deadlocked on a coronavirus relief plan to support economic growth.
EUROPE: Euro zone industrial production rose in June but by less than expected. Britain’s economy shrank by a record 20.4% in the second quarter.
CHINA: Chinese copper demand has been strong, with imports rising to record levels. Data on Tuesday showed new bank lending fell more than expected in July.
COLUMN: China’s booming metal imports are an echo of the last crisis, writes Andy Home.
POSITIONING: Speculators cut their net long position in LME copper to 4.7% of open contracts by Monday from 18% on July 13, brokers Marex Spectron said.
SPREAD: Cash copper stopped trading at a premium to the three-month contract on the LME for the first time in four weeks, pointing to an increase in nearby supply. <MCU0-3>
OTHER METALS: LME aluminium was down 0.1% at $1,784.50 a tonne, zinc fell 0.6% to $2,396, nickel slipped 0.7% to $14,245, lead was 0.3% lower at $1,954 and tin was down 0.5% at $17,595. (Reporting by Peter Hobson; Additional reporting by Mai Nguyen; Editing by Elaine Hardcastle and Jan Harvey)