Copper Gains After a Surprise Rise in Chinese Factory Activity

SEATTLE (Scrap Monster): Copper yesterday settled up by 0.03% at 716.1 after a surprise rise in Chinese factory activity lifted hopes for improved demand while a deal to avert a U.S. debt default boosted stock markets and weakened the dollar.

The Caixin/S&P Global manufacturing purchasing managers' Index (PMI) showed that Chinese manufacturing activity unexpectedly swung to growth in May, contradicting a weaker official PMI reading earlier in the week. With investors also betting that the U.S. Federal Reserve will not raise interest rates further at its next meeting, appetite for riskier, growth-linked assets grew.

Copper treatment and refining charges (TC/RCs) have been at a four-year high of $87.50 since last Thursday. Miners pay TC/RCs to smelters to process copper concentrate into refined metal, offsetting the cost of the ore. The charges rise when more concentration is available.

Copper inventories in warehouses monitored by the Shanghai Futures Exchange rose 0.5 % from last Friday, the exchange said. Peru's government is optimistic the country can reclaim its status as the world's second-largest copper producer, its mining minister said, after the Democratic Republic of Congo overtook the South American country last year.

Mining Minister Oscar Vera said Peru's copper industry can boost output of the key industrial metal as upcoming mining projects worth $6 billion come online over the next two years.

Technically market is under short covering as the market has witnessed a drop in open interest by -2% to settle at 6210 while prices are up 0.2 rupees, now Copper is getting support at 712.9 and below the same and could see a test of 709.6 levels, and resistance is now likely to be seen at 722, a move above could see prices testing 727.8.

 Courtesy: www.investing.com