November 30, 2021

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Low stocks, China support for property sector buoy copper prices

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London copper rose to a one-month high on Thursday, helped by China’s efforts to bolster its cash-strapped property sector and on concerns over tight global supply, while a weaker dollar made greenback-priced metals cheaper for holders of other currencies.

Three-month copper on the London Metal Exchange was up 0.4% at $9,872 a tonne, as of 0822 GMT, having earlier hit a peak since Oct. 22 at $9,920.

The most-traded January copper contract on the Shanghai Futures Exchange rose as much as 1.6% to 72,260 yuan ($11,312.72) a tonne in the session, its highest since Oct. 22.

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Copper is supported by signals of more property support in China, commodities broker Anna Stablum of Marex Spectron said in a note.

Chengdu, in the south west of China, said it will move to ensure developers receive funds from pre-sold properties and fresh loans, in the first such move by a Chinese city to ease a liquidity crisis in the sector.

“We see continued high volatility for copper prices in the near term, given visible copper stocks globally remain at multi-year lows. At such low levels, prices are likely to remain very sensitive, in both directions, to changes in both copper market fundamentals and sentiment,” said CRU analyst Craig Lang.

On-warrant LME copper inventories have slumped to 62,225 tonnes, down nearly 74% from 238,725 tonnes in August.

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“The market has recently become more concerned with the outlook for inflation and what that could mean in terms of the outlook for interest rates in the United States and potential demand impact if it leads to slower global economic growth,” Lang added.

A rate hike could dampen liquidity into metals and assuage an economic recovery momentum, eventually hurting demand.

Copper is often used to gauge global economic health.

The dollar index inched 0.1% lower on the day, having scaled an over 16-month peak on Wednesday on expectations that the U.S. Federal Reserve will tighten monetary policy faster than its peers.

FUNDAMENTALS

* ShFE aluminum rose 1.8% to 19,560 yuan a tonne, nickel climbed 2.5% to 154,540 yuan a tonne and zinc advanced 0.5% to 23,780 yuan a tonne.

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* ShFE tin rose as much as 2% to 293,690 yuan a tonne, its highest since Oct. 21, after the President of Indonesia, a major tin producer, said the country may stop tin exports from 2024 to attract downstream investments.

* LME aluminum was up 0.9% at $2,727 a tonne, nickel rose 1% to $21,045 a tonne, lead traded 0.4% higher at $2,271.50, while tin edged up 0.1% to $40,005 nearing a record high of $40,300 hit in the previous session.

* For the top stories in metals and other news, click or

($1 = 6.3875 Chinese yuan renminbi) (Reporting by Eileen Soreng in Bengaluru; Editing by Sherry Jacob-Phillips and Shailesh Kuber)

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Reuters

2021-11-25 03:48:35

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