Rising LME stocks, mixed China data keep copper steady
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Copper prices were steady on Tuesday as support from strong industrial production data in top metals consumer China was diluted by other data showing weak new home prices in China and by rising available inventories in the London Metal Exchange system.
Benchmark copper on the LME rose 0.1% to $9,630 a metric ton in official open-outcry trading.
Copper, used in power and construction, is down 2.5% so far this month, having retreated from its three-month high of $10,020 a ton set in early July. A pull back to around $9,585 is possible in the near term, said Dan Smith, managing director at Commodity Market Analytics. "If we can hold to that, we'll get the opportunity to go higher," he said.
Exports to the United States from other countries became less appealing after Washington said last week it planned to impose a 50% import tariff on copper from August 1. As Washington's announcement left three weeks until the tariff deadline, the amount of the metal marked as being prepared for delivery out from LME warehouses fell to only 11% of the total stocks. At 12,625 tons the so-called cancelled stocks are at a five-month low, compared with 56,325 tons a month ago.
Rising availability of copper in the LME system widened the discount for the cash copper contract against the three-month forward contract. The discount, known as contango, <CMCU0-3> was last at $80 a ton, a five-month high. This compared with a premium, or backwardation, of $320 less than three weeks ago, when there were concerns about tight nearby supply.
"We had this big collapse in the backwardation to a contango, but the remaining unknowns about the upcoming U.S. copper import tariff make it hard to plan anything," Smith said. "This is good for brokers, though, as they get more people looking to hedge."
LME aluminium rose 0.1% to $2,595.5 a ton in official activity. China's January-June aluminium production rose 3.3% to 22.4 million tons.
Zinc lost 0.9% to $2,705, lead eased 0.5% to $1,993, tin slid 0.3% to $33,430, while nickel fell 0.6% to $14,980.
