June 20, 2016 / 7:22 AM / 4 years ago

METALS-London copper steadies above 4-month low on softer dollar

* China home prices climb as smaller cities join rally

* Speculators take record short copper position in COMEX

* ShFE nickel up, tracks LME nickel as consumer interest climbs (Adds detail; updates prices)

By Melanie Burton

MELBOURNE, June 20 (Reuters) - London copper held above four-month lows on Monday as the dollar weakened following comments by a Federal Reserve official suggesting fewer U.S. interest rate hikes were on the cards.

St. Louis Fed President James Bullard has said the U.S. economy may only need one rate hike for as long as 2-1/2 years. A weaker greenback boosts demand for commodities priced in the dollar by making it cheaper for holders of other currencies.

Three-month copper on the London Metal Exchange rose 0.8 percent to $4,587 by 0705 GMT, after small gains on Friday. Prices are building a fragile base above $4,483.50, a four-month bottom hit on June 9, in a well-supplied market.

Shanghai Futures Exchange copper climbed 0.4 percent to 35,460 yuan ($5,389) a tonne.

“We continue to look for a well-supplied market for the next few months ... so we see prices continuing to drift lower,” said analyst Dan Morgan at UBS in Sydney.

China is importing more copper concentrate and its smelters are making more metal, feeding into already ample stockpiles and weighing on prices. The country’s copper output in May rose 6.6 percent from a year ago to 680,000 tonnes.

Copper stocks held in LME warehouses in Asia are set to jump around 50 percent in the next month as the metal is shifted out or diverted away from top consumer China, industry sources said.

Reflecting a bearish sentiment, hedge funds and money managers have raised their net short position in COMEX copper contracts to the biggest on record.

However, copper demand may draw some support from the property sector in China and the United States.

In China, while home price rises in the biggest cities showed signs of easing in May, sharp gains appeared to be spreading to smaller cities.

“Overall the property market is healthy ... This will underpin the underlying demand,” said Argonaut Securities.

U.S. housing starts slipped in May as the construction of multi-family housing units dropped, but further gains in building permits signalled a rebound that would support economic growth in the second quarter.

Property is a major driver of copper demand where it is used in power cables, and once constructed, consumer goods.

Among other metals, ShFE nickel rallied 2.8 percent, tracking Friday’s gains in London, after a large 2,382-tonne withdrawal from LME inventories and increasing buying interest for 2016 from consumers, broker Triland said in a note.

In news, China’s Commerce Ministry said on Monday it would reinvestigate its anti-dumping case into imports of high performance, seamless stainless steel tubes from Japan and the European Union.


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 = 6.5806 Chinese yuan Reporting by Melanie Burton; Editing by Himani Sarkar and Sunil Nair

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