May 20, 2020 / 1:50 PM / 9 days ago

METALS-Copper hovers near two-month high ahead of China govt meeting

* GRAPHIC-2020 asset returns: tmsnrt.rs/2jvdmXl (Updates with official trades)

By Zandi Shabalala

LONDON, May 20 (Reuters) - Copper prices hovered near a two-month high on Wednesday ahead of a Chinese government meeting this week expected to boost demand with pledges of higher spending on infrastructure to lift the top metals consumer from a coronavirus-driven slump.

The Chinese government typically announces new plans and economic targets at the annual National People’s Congress session which starts on May 22 and is closely watched for signs of demand increases for metals.

“The recent rally will be in anticipation of the NPC meeting over Thursday and Friday, where expectations are for big infrastructure investment figures,” said BMO Capital Markets analyst Tim Wood-Dow.

China accounts for nearly half of annual global copper consumption estimated at 24 million tonnes.

“China is looking very strong; stocks are drawing, the cathode premium increasing, operating rates at wire and cable fabricators high but the rest of the world remains questionable,” Wood-Dow said.

Benchmark copper on the London Metal Exchange (LME) gained 0.1% to $5,360.50 tonne in official trading.

The metal widely used in power climbed to a high of $5,377.50 a tonne on Tuesday, its highest since March 16, on optimism over a potential COVID-19 vaccine.

CHINA COPPER: In signs of continued recovery from the coronavirus, China’s refined copper output in April rose 9.2% compared to a year earlier and was 6.2% higher than the previous month.

SHORTS EASE: The LME copper net speculative short sits at 14% of open interest or 23,000 lots as of Monday, according to broker Marex Spectron. This is down from the year-to-date peak of 26% of open interest on April 1.

YANGSHAN COPPER: Indicating strong demand, the Yangshan copper premiums SMM-CUYP-CN are currently assessed at $113.5 a tonne, the highest since Oct. 2018. They are paid on top of LME copper prices to import metal into China.

TRADE WAR: U.S.-China tensions simmered on Tuesday after Washington imposed sanctions on a China-based company it accused of acting on behalf of U.S.-blacklisted Mahan Air, a move which Beijing called “illegal”.

SPREAD: The premium of LME tin cash over the three-month contract CMSN0-3 was last at $130 a tonne, indicating near-term supply tightness. The premium reached $175 a tonne last week, its biggest since June 2019.

OTHER PRICES: LME tin eased 0.2% to $15,336 a tonne, aluminium shed 0.4% to $1,486.50, zinc fell 0.9% to $2,016, lead fell 0.2% to $1,679.50, while nickel was down 0.4% to $12,408. (Additional reporting by Mai Nguyen; Editing by Emelia Sithole-Matarise and Louise Heavens)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below