London copper held steady on Monday, down from a 10-day top hit the session before, as persistent strength in the US currency ahead of a monetary policy meet this week dampened commodities.
After successive months of strong jobs data, expectations have been growing that the Federal Reserve will signal a June rate rise at a meeting that begins on Tuesday. A stronger dollar erodes the purchasing power for commodities.
That, plus questions over China’s economic growth after comments by Premier Li at the week-end added headwinds to copper, said analyst Joel Crane of Morgan Stanley in Melbourne.
Premier Li Keqiang, addressing a news conference, vowed to keep China’s economy growing at a reasonable speed, even as he acknowledged the job is not easy.
“What we’ve seen on China’s data indicators so far is fairly negative, so it’s not surprising that people would be worried about whether the post-New Year recovery is underway,’’ Crane said.
LME copper
Three-month copper on the London Metal Exchange pared early losses of half a per cent to trade little changed at $5,853 a tonne by 0230 GMT. It closed a tad firmer on Friday, when it also hit its highest since March 3 at $5,900 a tonne.
Prices have slowly been gaining ground as China’s factories ramp up after Lunar New Year, climbing up from 5-1/2 year lows under $5,400 a tonne in January, but slowing economic growth and ample refined supply has blunted momentum.
The most-traded May copper contract on the Shanghai Futures Exchange was flat at 42,700 yuan ($6,820) a tonne.
In the near term, ballooning exchange stocks, with Shanghai inventories near a record, has raised the risk of a correction, BNP Paribas said.
“Copper’s recovery and outperformance of other metals since late January have come despite a large rise in exchange stocks, leaving it vulnerable to a retreat,’’ the bank said.
Still, speculators increased their net long position in copper futures and options during the latest week US data showed.
Top global aluminium producer Rusal said it has raised China’s swelling aluminium exports with the Australian government, and wants the issue discussed at the next meeting of the world’s top customs body.
China’s rising exports of cheap semi-finished aluminium have been undermining global premiums, a delivery surcharge to obtain physical metal.
But there is still uncertainty over the surplus supply expected this year, with copper miner Antofagasta Plc saying on Sunday it cannot guarantee its embattled Los Pelambres mine in Chile will continue to operate.