June 23, 2016 / 4:11 AM / 4 years ago

METALS-London copper buoyed near 2-wk top ahead of UK vote

* Premiums for copper CIF China firm $2.50 to $40-$60

* Coming Up: Euro zone Markit mfg flash PMI Jun at 0800 GMT (Adds detail, updates prices)

By Melanie Burton

MELBOURNE, June 23 (Reuters) - London copper floated near its highest in more than two weeks on Thursday on a softer dollar, but gains were capped as Britain geared up to vote on whether to leave the European Union.

British Prime Minister David Cameron and his eurosceptic opponents made final pitches to wavering voters on Wednesday, the eve of a referendum on European Union membership, with the outcome still too close to call.

“If the UK remains in the EU, it’s going to trigger dollar weakness,” said analyst Dominic Schnider of UBS Wealth Management in Hong Kong. Once that is past, though, investors will be looking at indicators that are more bearish, he said.

“We forecast a U.S. interest rate hike in the third quarter. That’s negative for copper,” Schnider said.

A stronger dollar erodes demand for dollar-priced assets by making them more expensive for holders of other currencies.

Three-month copper on the London Metal Exchange traded up 0.6 percent at $4,729.50 a tonne by 0724 GMT, after a 0.6 percent gain in the previous session when prices also hit the highest since June 6 at $4,733.50 a tonne.

Fundamentally, copper was also facing headwinds from increasing mine supply, Schnider added, with few disruptions seen so far this year.

“In a world where we have no unplanned outages, the risk is for a much larger surplus, 500,000 tonnes maybe. Then obviously it becomes problematic for copper.”

Shanghai Futures Exchange copper closed up 1 percent at 36,270 yuan ($5,512) a tonne

China’s domestic copper market tightened in early June, as surplus metal was moved into international storage.

But domestic supply appears to be improving, with premiums for metal for immediate delivery - as seen in front month ShFE futures against further dated contracts - last at nearly flat from as high as 200 yuan at mid-month.

Suggesting there is still appetite for imports, however, premiums for shipments to China on a cost, insurance and freight basis firmed by $2.50 to $40-$60, up from as low as $35 mid-month, which was the weakest in four years. <0#BASECIF-SHMET>

In news, China’s debt defaults will not pose a systemic risk as long as economic growth remains within a reasonable range, according to a government document on Thursday.

The International Monetary Fund said on Wednesday the U.S. economy was “overall in good shape,” with growth set to regain momentum despite an overvalued dollar.


Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

$1 = 6.5735 Chinese yuan $1 = 6.5796 Chinese yuan Reporting by Melanie Burton; Editing by Tom Hogue and Biju Dwarakanath

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