LONDON - Copper rose to a more than two week high on Thursday, tracking equities and firmer oil prices, although fears over demand and the global economy remained.
Oil rose above $43 a barrel after the United Arab Emirates announced deeper cuts in crude supply to Asia for April in a possible signal that OPEC will cut output further at its next meeting in March.[O/R
European shares were up 2.2 percent around midday, snapping a four-day losing run as banks rallied from recent sharp losses, led by Royal Bank of Scotland (RBS) and UBS.
RBS shares jumped after the lender said it would place 325 billion pounds in assets in the UK insurance scheme as it posted the biggest in loss British corporate history.
Copper for three-month delivery on the London Metal Exchange rose 1.5 percent to $3,465 a tonne in rings from $3,415 at the close on Wednesday and compared with a session high at $3,503.50.
“It was a good close yesterday,” Leon Westgate, an analyst at Standard Bank, said. “It’s a bit on equities ... (but) turnover with the exception of copper has been exceptionally low.”
“The market is being very short-sighted and continues to be very short-sighted, while the fundamentals are irrelevant ... when the fundamentals start to re-assert themselves, and people can feel confident to price in a recovery, then metals will start to move quickly.”
The price of copper, used in power and construction, has fallen about 60 percent since a record $8,940 in July 2008.
But in positive news, copper LME stocks fell 2,925 tonnes to 545,475 tonnes.
And in a rare break from the run of mine closures and smelter shutdowns of the past six months, copper and gold production started up at the newly-developed Prominent Hill mine in Australia, owner OZ Minerals Ltd said on Thursday.
Also helping sentiment, South Korea bought 5,000 tonnes of copper cathode for shipping to the port of Gunsan, an official at the state-run Public Procurement Service said.
“What goes down must come up,” said one LME trader. “If you look at all markets—they are all reacting—it’s the end of the month isnt it ?”
“You have the same thing on the stock market—today we had RBS—and some people are saying maybe that’s all the bad news out of the way. Probably a little bit more (Chinese) demand too.” Another trader said that there may be signs that Chinese stimulus packages were starting to take an effect on prices.
Macro data remained bearish however—the German economy shrank 2.1 percent in the last quarter of 2008, its weakest quarter since reunification in 1990, and a bigger than expected fall in U.S. existing home sales in January slowed gains.
Aluminium traded at $1,350 in LME rings versus $1,343. The metal used in transport and packaging has come under pressure in recent months on news of falling car sales data from auto makers.
LME stocks jumped 18,275 tonnes to 3.2 million tonnes—a reminder of weaker demand for the metal.
Nickel was last bid at $10,200 from $10,075 at the close on Wednesday, lead traded at $1,045 from $1,030 and zinc at $1,146 from $1,145.
“It’s difficult to get a sense of where we’re headed ... copper is still setting the tone and remains stable because everyone is trying to second guess what’s going on in China,” Robin Bhar, senior metals analyst at Calyon, said.
“Is the SRB buying or not, is demand ok? It’s difficult to get a sense and I suspect if you visited China, you’d probably be as confused as if you didn’t go out there,” Bhar added.
