Copper steadies near three-week low amid easing LME tightness

SEATTLE (Scrap Monster): Copper held near a three-week low on Tuesday as an early rebound faded, while physical buying in China showed signs of improvement and inventories in London Metal Exchange warehouses rose.

Three-month copper on the LME CMCU3 edged up 0.10% to $14,014.50 a metric ton by 0700 GMT, after hitting a more than three-week low of $13,958 on Monday.

The most-traded copper contract on the Shanghai Futures Exchange SCFcv1 closed 1.07% lower at 107,030 yuan ($15,944.40) a ton, after touching 106,650 yuan during overnight trading, its lowest level in more than three weeks.

Lower prices encouraged some physical buying in China, with demand showing signs of recovery, traders said, after a selloff triggered by a Reuters’ report last week that the White House washesitant to impose tariffs on the red metal.

The Yangshan copper premium SMM-CUYP-CN, a gauge of Chinese demand for imported copper, rose to $100 a ton on Monday, the highest since mid-August.

Meanwhile, signs of improving exchange availability have eased concerns over near-term supply tightness.

Copper stocks in LME-registered warehouses MCUSTX-TOTAL jumped 3.59% on Friday to 242,900 tons, while the LME cash contract traded at a discount of around $67.50 a ton to the three-month contract CMCU0-3.

“Rising inventories and softer nearby spreads suggest that the extreme tightness across the LME market is beginning to moderate,” ING analysts said in a note.

U.S. COMEX copper stocks HG-STX-COMEX were little changed at 767,599 short tons, or about 696,400 metric tons.

ING said copper could remain under pressure in the near term as stretched positioning unwinds, though persistent mine-supply constraints should continue to support prices.

A stronger dollar and caution ahead of the Federal Reserve’s policy decision remained headwinds for base metals.

The dollar hovered near a two-week high on Tuesday as markets increasingly priced in a rate hike.

LME aluminium CMAL3 rose 0.35%, while zinc CMZN3 fell 0.26%, lead CMPB3 lost 0.21%, nickel CMNI3 slipped 0.33% and tin CMSN3 edged up 0.07%.

SHFE aluminium SAFcv1 rose 0.46%, while zinc SZNcv1 fell 1.43%, lead SPBcv1 dropped 1.16%, nickel SNIcv1 lost 0.90% and tin SSNcv1 declined 2.67%.

Courtesy: www.mining.com