Copper gains on China stimulus hopes

Copper prices rose overnight on news of fresh stimulus measures in top metals consumer China and hopes for a US-China trade deal.

Other industrial metals, such as zinc, were dampened by the prospect of rising supply and producer selling.

The Chinese government said on Monday it would relax residency curbs in many of its smaller cities and increase infrastructure spending to boost economic growth.

On Sunday, China also announced measures to encourage financing for small and medium-sized businesses.

“Given those stimulus developments that we’ve seen over the weekend, the lack of an upward move across the board is quite telling. We feel the stimulus was already largely factored into the market and I think this reiterates it,” said Ross Strachan, senior commodities economist at Capital Economics in London.

Benchmark copper on the London Metal Exchange gained 1.2 per cent in closing open outcry trading to trade at $US6,475 a tonne, snapping two days of decline.

Some other metals prices ended in the red.

Three-month LME zinc shed 0.6 per cent to finish at $US2,906 a tonne, partly due to producers seeking to lock in high prices through hedging programmes, said Alastair Munro at broker Marex Spectron.

“There was evidence of a producer offer via the forward curve,” he said in a note.

On-warrant LME zinc inventories rose six per cent to 46,725 tonnes after touching record lows in late March, according to daily LME data on Monday, helping to alleviate shortages.

Strachan of Capital Economics said although the refined zinc market was experiencing shortages, strong mine output would soon filter into the refined market.

“I think zinc is the metal that probably has the most downside potential. It’s clearly got more genuine tightness than some of the other metals, but the supply growth that is coming there should shift that picture sooner rather than later.”

LME zinc touched a nine-month peak last week and has gained 17 per cent so far this year.

The US Trade Representative said significant work remained ahead of fresh talks due this week, while Chinese state media said the two sides had made “new progress” in the talks.

“This Chinese comment may well have triggered some of the metals buying,” Malcolm Freeman, director and chief executive of Kingdom Futures, said in a note.

MMG Ltd said its Las Bambas copper mine in Peru is expected to resume normal operations after an indigenous village agreed to end a two-month blockade.

Refined tin exports from Indonesia, the world’s top exporter, rose five per cent in March on an annual basis to 5,735.68 tonnes, data showed.

LME aluminium slipped one per cent to close at $US1,871 a tonne, nickel was bid 0.5 per cent firmer at $US13,180, lead added 0.3 per cent to $US1,991.50 and tin dropped 0.8 per cent to $US20,825.

By AAP

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