World Economy

Copper Recovers From 2-Week Low

Copper Recovers From 2-Week LowCopper Recovers From 2-Week Low

Copper rebounded from a two-week low on Monday as investors shrugged off weak trade data from top metals consumer China and bet that demand would increase there following a holiday.

Also contributing to the gains was a jump in Chinese banking shares on hopes Beijing would grant more brokerage licenses, forcing some copper shorts to cover, traders said, Reuters reported.

“We would expect to see a rally over the next few weeks as we start to get data showing that things are not as dire as people had feared,” said Caroline Bain, senior commodities economist at consultancy Capital Economics.

“Negative sentiment for copper was overdone. Certainly, I think over the next few weeks we will see a pick-up in physical demand for copper in China.”

Three-month copper on the London Metal Exchange gained 0.6 percent at $5,778.50 a ton by 1006 GMT, after it earlier slipped to $5,714, its weakest since Feb. 24. Prices shed 1.5 percent on Friday.

The most traded May copper contract on the Shanghai Futures Exchange pared losses of more than 1 percent at one point to end down just 0.2 percent at 42,300 yuan ($6,754) a ton.

 Data Distorted

While China’s imports of commodities eased again in February, sparking a knee jerk negative reaction in Asian trade, analysts said the data was distorted by the timing of the Lunar New Year holiday, which took a bite out of shipping volumes.

Copper imports, at 280,000 tons in February, slowed by nearly a third from January and were down more than a quarter from a year earlier.

“China’s start to the year feels a tad soft specifically on copper and coal,” said analyst Daniel Morgan of UBS in Sydney, adding that the full picture for Chinese demand would not be clear until late April, given this year’s unusually late Lunar New Year.

Data showing hedge funds and money managers switched to a net long copper position in the week to March 3 on the US Comex market also boosted sentiment.

Copper got support from news that output at the Pelambres mine of Chilean copper miner Antofagasta Plc has been reduced by about 5,000 tons in the past week due to protests by local villagers.

A number of production hiccups have caused many analysts to cut their forecasts of a global surplus in recent months as mining companies revise down their output due to issues ranging from geological issues to water shortages in top producer Chile.