METALS-Copper, zinc push higher as speculators resume buying

Thu Apr 20, 2017 4:14pm GMT

* LME/SHFe arb: (Updates with closing prices, adds ICSG data)

By Eric Onstad

LONDON, April 20 (Reuters) - Copper, zinc and other base metal prices gained on Thursday as investors, speculators and consumers resumed buying after recent losses, expecting increased seasonal demand.

The London Metal Exchange index of the six major base metals had slid about 7 percent during April up to Tuesday after the easing of supply problems such as a strike in top copper producer Chile.

But after prices largely stabilised on Wednesday, investors gained confidence to return to the market since the second quarter is regarded as the peak period for physical demand because the construction industry gears up in spring.

During the prior rally, the LME index had surged 23 percent from late October to the end of March, which many analysts regarded as excessive.

"With a lot of speculative excess, we needed for that to be addressed, which has happened with the sell-off in copper and zinc. But now we're into the second quarter so we should expect more physical interest," said Robin Bhar, head of metals research at Societe Generale.

"I suspect that the CTA models are starting to flash some buy signals since prices have held above those longer-term moving averages and consumers have been waiting for a pull back."

Commodity Trading Advisors (CTAs) often run funds that use computer models to track momentum and technical signals, such as the 200-day moving average, which zinc and lead tested but remained above.   Continued...

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