Copper prices climbed overnight as the Federal Reserve’s latest move to provide further support for the US economy helped to boost sentiment, but gains were capped by worries about prospects for demand in top consumer China.
Benchmark copper on the London Metal Exchange was up 0.3 per cent at $US5,722 a tonne at 1604 GMT from an earlier high of $US5,836 a tonne.
Prices of the metal used to make products widely used in the power and construction industries last week rose to $US5,928 a tonne, the highest since January 24 and a 35 per cent increase since the middle of March.
“Central bank stimulus has been behind the rallies in all markets considered to be risky,” a copper trader said. “But for these levels to hold or for a push beyond $US6,000, we need solid evidence that Chinese demand is going to hold up.”
The Federal Reserve has launched its Main Street Lending Program, the most complex program yet to help keep the backbone of the economy from buckling under the strains of the coronavirus pandemic.
Fed stimulus has weighed on the US currency, which when it falls makes dollar-denominated commodities cheaper for buyers in other currencies. This relationship is used by funds to generate buy and signals from numerical models.
China’s factories stepped up production for a second straight month in May, although the weaker-than-expected gain suggested the recovery remained fragile.
Major support for copper prices is at $US5,660 where the 200-day moving average currently sits.
Historically low stocks of tin in LME registered warehouses have fuelled worries about nearby supplies on the exchange.
That pushed the premium for the cash over the three-month tin contract to $US372.5 on Monday, the highest since August 2015. It was last at $US215 a tonne.
Three-month tin rose 0.2 per cent to $US16,875 a tonne.
Aluminium was up 1.2 per cent at $US1,596, zinc gained 0.8 per cent to $US1,999, lead added 1.5 per cent to $US1,764 and nickel climbed 2.1 per cent to $US13,005 a tonne.