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METALS-Copper bounces on bargain hunting, slide in inventories

Reuters

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(Updates with official prices) By Eric Onstad LONDON, Sept 22 (Reuters) - Copper prices rebounded on Tuesday as investors took advantage of a pull-back from two-year highs and as inventories continued to decline. The market dropped 1.8% on Monday after touching the strongest levels since June 2018 early in the day on worries that a second wave of COVID-19 would result in lockdowns, hurting economic activity and metals demand. "Some bargain hunters are coming in today. I think this sell-off was a bit overdone. Broad-based, nationwide lockdowns are very unlikely because we have all realised that for the economy it's unbearable," said analyst Carsten Menke at Julius Baer in Zurich.


"I think we're in for some rangebound trading because markets are really torn between the strength of Chinese demand and the supply-side disruptions." Three-month copper on the London Metal Exchange had gained 1.4% to $6,784 a tonne in official trading.


It has surged by more than 50% since hitting 45-month lows in March, largely spurred by strong demand in top metals consumer China and worries about mine disruptions due to the pandemic.


"This morning Chinese buyers have been quietly picking up relatively cheap metal as they were never going to chase the market but just wait for an overdue correction," Malcolm Freeman at Kingdom Futures said in a note.

* Also supporting copper were low stocks . LME on-warrant copper inventories slid by 19% on Tuesday to 28,775 tonnes, the lowest since March 2019, having more than halved over the past two months.
* Capping gains was a strong dollar index , which hit six-week highs as markets turned risk-averse over a surge of virus cases and new lockdown measures in Europe. A strong dollar weighs on commodity prices as it makes greenback-denominated products expensive for buyers holding other currencies.
* The global refined copper market showed a 192,000-tonne deficit in June, compared with a 36,000-tonne deficit in May, data showed.
* Aluminium edged up 0.3% to $1,785.50 a tonne in official activity, zinc gained 1.3% to $2,490, lead added 0.6% to $1,899.50, nickel rose 0.4% to $14,593 and tin shed 0.3% to $18,045.
* For the top stories in metals and other news, click or (Reporting by Eric Onstad; Editing by Jan Harvey and David Evans)


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