BR:Copper near one-month high ahead of Bernanke testimony
SINGAPORE: London copper edged towards a one-month high on Wednesday, with traders waiting to see whether Federal Reserve Chairman Ben Bernanke will reiterate later in the day that US monetary policy is to stay accommodative.
Comments favouring looser US policy for longer triggered a cross-commodity rally earlier this month, because more liquidity in the banking system tends to lift the value of hard assets.
But copper should be insulated from any downbeat comments about the US economic recovery because much of the world's stockpiles are tied up by loading jams at warehouses and
financing deals that lock metal away as collateral, said Jonathan Barratt, chief executive of Sydney-based commodity research firm Barratt's Bulletin.
"For the copper market, a bullish sentiment will be supportive but any negative news will not hit too hard," he said, noting that he thought tapering would not be brought forward because the global economy was not as strong as expected.
US consumer prices picked up in June and underlying inflation pressures showed signs of stabilizing, keeping on course expectations that the Fed will start reducing its bond purchases this year.
Three-month copper on the London Metal Exchange had edged up 0.26 percent to $7,016.25 a tonne by 0310 GMT, adding to gains of more than 1 percent from the previous session.
Copper prices reached the highest in nearly 1 month at $7,049.25 a tonne on July 11, but have failed to find further momentum as the seasonally slow summer period gets underway.
The most-traded November copper contract on the Shanghai Futures Exchange traded at 50,510 yuan ($8,200) a tonne, up by more than 1 percent.
Adding support to prices, China's commerce ministry said on Wednesday that it will soon release measures to support exports and imports, though it did not give details.
Dimming copper's prospects, however, is rising medium term supply. At BHP Billiton's majority owned Escondida mine in Chile, the world's single-largest lode, copper output rose 28 percent to 1.1 million tonnes in the 2013 fiscal year, production data on Wednesday showed.
Next week, a US Senate committee will hold a hearing on whether banks should control physical commodities storage, where metals such as copper have been stuck in queues to exit warehouses. That may signal that lawmakers are ready to toughen their stance on the controversial but lucrative business for Wall Street companies.
