Copper up amid choppy trading
Copper futures rose one per cent yesterday, with prices in London and Shanghai reversing early losses in a choppy trading pattern that is set to continue as investors weigh increasingly positive data against news the rally is overdone.
Metals prices have surged this year – copper and lead have rallied almost 110 per cent since January – and even aluminium, the weakest of the London Metal Exchange constellation, has risen 24 per cent.
But a slide of three per cent in oil on Tuesday, crude's biggest one-day loss since August 14, a near-4,000 tonne copper stock rise and worries that Chinese demand for industrial raw material is slowing from its record pace in the year to July, sparked profit-taking across the sector.
Copper for three-month delivery on the LME rose $51 (Dh187) to $6,362 a tonne, having dipped to $6,240 in early trade and later peak at $6,390. Copper closed down 1.7 per cent in the previous session.
"The London guys got nervous that the market was overcooked. The RSI in copper has been pretty high and the slower tempo in imports probably spooked a few of the longs to cash out," said a dealer in Singapore.
The dealer doubted the market had much room on the upside – investors have priced in a lot of positive news – but he expected a period of consolidation that would cement current ranges, with copper trading in a broad band between $5,700 and $6,700 over the next four to six weeks.
Shanghai copper rose 1.3 per cent, or Y620 (Dh333), to Y50,020, having dropped to Y49,000 in early trade. The discount for Shanghai copper has halved in the past two days to Y823, accounting for China's 17 per cent VAT and if the trend continues merchant might again gear up to import spot material.
Sentiment in Shanghai was underpinned by the reversal of a 1.5 per cent early loss in Chinese equity markets, which rallied 1.8 per cent, lifted by a recovery in property shares. But data shows the link between the markets is patchy. The correlation factor between the two over the past 30 days was -0.38.
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