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London copper climbed away from a four-week low on Wednesday as investors covered short positions, but the gains were capped by a stronger dollar after improving US economic data backed the case for an interest rate rise soon.
Three-month copper on the London Metal Exchange had climbed 0.6 per cent to $6,139 a tonne by 0745 GMT, after a drop of around 1 per cent in the previous session when it touched its weakest since April 29 at $6,105.
The most traded August copper contract on the Shanghai Futures Exchange fell 1 per cent to 44,420 yuan ($7,160) a tonne. It faced strong resistance at the 200-day moving average of 44,500 yuan.
Copper is getting little help from the lacklustre economic outlook in top consumer China.
“Even if you get some early signs which show you some improvement ... the macro story in China doesn’t look good,’’ said analyst Dominic Schnider of UBS Wealth Management in Hong Kong.
“The only area that is more debatable is the supply side. Here copper gives you a little bit of an edge. We are still calling for a $6,350 short-term target — three months — with room to go for $6,700 in the second half,’’ he said.
Chinese industrial sector profits rose 2.6 per cent in April, the first annual rise since last September, National Bureau of Statistics data showed, in a sign that the central bank’s easing measures may finally be filtering into the real economy.
In other metals, ShFE tin slid 1.9 per cent, tracking Tuesday’s loses in LME tin on supply concerns as Myanmar ramps up mine production. LME tin fell to its lowest in a month at $15,330 a tonne on Wednesday after losing nearly 2 per cent on Tuesday.
Macquarie noted that China imported large volumes of tin ores and concentrates in April, “once again illustrating why the market is oversupplied and why supply cuts from Indonesia (rather than simply rhetoric) are required”.
Indonesia, the world’s top exporter of refined tin, said it would introduce strict new rules for shipments in a renewed effort to stamp out illegal mining and support prices.
JP Morgan has kept its short trading recommendations in both December LME aluminium and zinc. “We believe prices of both metals have further to fall in the coming weeks before aligning with market fundamentals.”
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