November 25, 2019 / 12:10 PM / 6 months ago

METALS-Trade war optimism and inventory plunge push copper higher

(Updates throughout, changes dateline from SINGAPORE)

By Peter Hobson

LONDON, Nov 25 (Reuters) - Copper prices rose on Monday after positive comments from the United States and China on the progress of trade talks and a sharp decline in available stocks in London Metal Exchange (LME) warehouses.

Benchmark copper on the LME was up 0.7% at $5,895.50 a tonne at 1149 GMT after touching $5,917, its highest since Nov. 12.

Prices of the metal used in power and construction are down about 20% from last year’s high as the trade dispute drags on global economic growth and metals demand.

“Both supply and demand remain very weak,” said ING analyst Wenyu Yao.

She said that a sharp drop in treatment charges for smelters could curtail Chinese copper output, adding that lacklustre demand is likely to hold prices around current levels through next year.

TRADE WAR: A Chinese state-backed tabloid said that China and the United States were “very close” to an initial trade agreement, adding to optimism from Friday, when the presidents of both countries reiterated their desire for a deal.

STOCKS: On-warrant copper inventories in LME-registered warehouses fell 22% to 127,850 tonnes, the lowest since March 14. MCUSTX-TOTAL

POSITIONING: Speculators’ net short position in LME copper was equal to 1.5% of open contracts as of last Thursday, broker Marex Spectron said. Short positions on the U.S. COMEX exchange have also expanded.

MANUFACTURING: Germany’s Ifo institute said its headline business climate index rose slightly but the country’s manufacturing sector remains in recession.

U.S. manufacturing output, however, accelerated in November to its fastest pace in seven months, data showed on Friday.

CHINA IMPORTS: China’s imports of refined copper and zinc rose in October, while imports of scrap metal fell 43% from the previous month to 160,000 tonnes, data showed.

China’s October nickel ore imports from Indonesia jumped by more than 23% from the previous month, lifted by Chinese buyers stocking up ahead of a ban on exports from Indonesia from January.

NICKEL: The European Union launched a complaint at the World Trade Organization on Friday against Indonesia’s curbs on exporting nickel and other raw materials.

ALUMINIUM STOCKS: On-warrant aluminium inventories in LME warehouses rose by 50,850 tonnes to 1,051,725 tonnes, the most since Jan. 16.

GOLDMAN: Goldman Sachs said its top 2020 trade recommendation is its commodities index, with the best returns likely to come from oil.

OTHER METALS: LME aluminium was down 0.1% at $1,737.50 a tonne, zinc lost 0.2% to $2,300, nickel fell 1.1% to $14,480, lead slipped 0.5% to $1,956 and tin was up 0.1% at $16,360. (Reporting by Peter Hobson Editing by David Goodman)

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