Make Kitco Your Homepage

Copper climbs to 6-week high on floods in top buyer China

Kitco News

LONDON, July 26 (Reuters) - Copper prices rose on Monday as floods in top consumer China sparked demand hopes at a time when inventories were falling, while a softer dollar also supported prices.

Benchmark copper on the London Metal Exchange was up 0.8% to $9,593 per tonne by 1100 GMT after touching its highest since June 16 at $9,665. It was on track for a fifth straight session of gains.

Floods in central China, especially in the industrial and transport hub city of Zhengzhou in Henan province, have raised supply concerns and demand for rebuilding damaged infrastructure. Copper is mainly used in the construction and power industries and China accounts for about half of global copper consumption.

"Sentiment has brightened again in the last few days, reflected in the copper price," Commerzbank analyst Daniel Briesemann said, adding he believed copper was due for a correction, having hit a record of above $10,700 a tonne in May.

A Singapore-based trader said the market was pricing in disruptions to output from floods in Henan and demand for reconstruction.

INVENTORIES: On warrant copper stocks in LME-registered warehouses fell to 205,800 tonnes while metal in warehouses monitored by the Shanghai Futures Exchange fell to their lowest since Feb. 10 at 96,087 tonnes.

PREMIUMS: In a sign of rising physical demand in China, Yangshan premiums have climbed to $47.50 a tonne from recent lows of $21 touched in June.

SPREADS: The discount of LME copper over three-month contract narrowed to about $21 a tonne from about $40 a tonne two weeks ago. This was the tightest since July 7.

FED: The dollar softened as markets anticipated the outcome of a meeting by U.S. Federal Reserve for clues on the pace of monetary policy changes, which has implication for liquidity and base metals.

OTHER PRICES: Aluminium eased 0.2% to $2,498 a tonne, zinc shed 0.2% to $2,956, lead advanced 0.3% to $2,381, tin fell 0.7% to $34,250 a tonne and nickel rose 0.4% to $19,455 after touching its highest since Feb. 25.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.