ET:Copper rebounds from 6-week low, traders eye euro zone inflation
SINGAPORE: Copper edged higher on Wednesday as bargain hunting put a floor under the market, which had slid to its lowest in almost six weeks on concerns over slowing demand in top consumer China and worries about the U.S. economic stimulus.
World equities stabilised and the dollar clawed back some of the previous day's losses against the yen although markets remained on edge over the future of central bank support.
Three-month copper on the London Metal Exchange rose 0.9 per cent to $7,126.25 by 0341 GMT, after dropping earlier in the day to its lowest since May 3. The Shanghai Futures Exchange is shut until Thursday for a holiday.
"Even though the numbers out of China have not been positive, copper is relatively inexpensive at these levels," said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt's Bulletin.
Copper, which has lost more than 10 per cent this year, has been facing headwinds from concerns over the prospects for continued U.S. stimulus and slowing Chinese growth.
The growing risk that China's economic growth will slide further in the second quarter, after weekend data showed unexpected weakness in May trade, also dragged on prices.
Chinese volumes of major metals imports, including copper and alumina, fell at double-digit rates. The country is the world's top consumer of copper, making up around 40 per cent of global demand.
GIVING DIRECTION
Metals markets will look to euro zone inflation numbers later this week for signs of recovery, analysts said.
"The focus is on inflation numbers out of Europe for signs of price pressure to the topside," said Barratt. "They should be supportive."
Euro zone inflation data is due on Friday. Copper is being supported by a dimming outlook for supply. Operations at the world's No. 2 copper mine in Indonesia, run by Freeport McMoRan Copper and Gold Inc, have been shut since an accident last month killed 28 workers.
India's top copper smelter is preparing to reopen, potentially adding to a short-term squeeze on concentrate supply. The smelter will only operate until the second week of July, however.
Global miner BHP has agreed a rise of around 3 per cent in the fees it will pay Japanese smelters to process its copper concentrate in the second half, after several mine shutdowns hit global supply, dealing the firm a stronger hand in talks.
