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Copper March 16, 2015 05:07:02 AM

London copper near two-week high as dollar takes breather

Paul Ploumis
ScrapMonster Author
London copper edged higher on Monday, towards a 10-day top hit the session before, as a lull in the U.S. dollar strength ahead of a monetary policy meet this week eased pressure on commodities.
London copper near two-week high as dollar takes breather

MELBOURNE, March 16 (Reuters) - London copper edged higher on Monday, towards a 10-day top hit the session before, as a lull in the U.S. dollar strength ahead of a monetary policy meet this week eased pressure on commodities.

After months of strong jobs data, expectations have been growing that the Federal Reserve would signal a June rate rise at a meeting that begins on Tuesday. A stronger dollar erodes purchasing power for commodities, but the dollar paused for breath on Monday.

That, plus questions over China's economic growth after comments by Premier Li Keqiang added headwinds to copper, said analyst Joel Crane of Morgan Stanley in Melbourne.

Premier Li vowed to keep China's economy growing at a reasonable speed, even as he also said authorities could do more to stoke growth, which triggered a rally in Chinese equities.

 

"What we've seen on China's data indicators so far is fairly negative, so it's not surprising that people would be worried about whether the post-New Year recovery is underway," Crane said.

Three-month copper on the London Metal Exchange pared early losses to climb by 0.5 percent to $5,885 a tonne by 0726 GMT. It closed a tad firmer on Friday, when it also hit its highest since March 3 at $5,900 a tonne.

Prices have been gaining ground as China's factories ramp up after the Lunar New Year, climbing from 5-1/2 year lows of under $5,400 a tonne in January, but slowing economic growth and ample refined supply has blunted momentum.

The most-traded May copper contract on the Shanghai Futures Exchange edged up 0.3 percent to 42,810 yuan ($6,837) a tonne.

In the near term, ballooning exchange stocks, with Shanghai inventories near a record, has raised the risk of a correction, BNP Paribas said.

Still, speculators increased their net long position in copper futures and options during the latest week, U.S. data showed.

Top aluminium producer Rusal said it has raised China's swelling aluminium exports with the Australian government, and wants it taken up with the world's top customs body.

But there is uncertainty over surplus supply expected this year, with Antofagasta Plc saying it cannot guarantee its Los Pelambres mine in Chile will continue to operate.