London - Copper hit its highest point in more than a week on Tuesday, as concerns eased about an early cut in US monetary stimulus, and as investors monitored a prolonged shutdown at the world's second biggest copper mine.
Data out late Monday showed US manufacturing activity contracted in May for the first time in six months, leading investors to review bets that the Federal Reserve will soon scale back its stimulus programme.
Also on Monday, a government official said Freeport McMoRan Copper and Gold Inc's Grasberg copper mine in Indonesia will not be able to resume output until a probe into a deadly tunnel collapse is completed in about three months.
Freeport suspended operations at the world's second-biggest copper mine in Indonesia on May 15, a day after a training tunnel collapsed killing 28 people.
Three-month copper on the London Metal Exchange was up 0.80 percent to $7,398.75 a tonne by 0935 GMT, having earlier hit its highest in more than a week at $7,410 a tonne.
Copper prices climbed 3.6 percent in May for their first monthly advance since January, but are still down nearly 7 percent for
the year as a whole.
“The market seems to have been deaf in one ear, only hearing negative news on copper and no positive. We have a tightening of
the market. The closure of Grasberg for another few months is not in the prices yet,” said Commerzbank analyst Eugen Weinberg.
Reflecting solid physical demand for copper in top consumer China, premiums for bonded material were quoted in a range of
$135-$150 by China information provider Shmet. (http://www.shmet.com/)
China consumes about 40 percent of the world's copper, and its lack of buying appetite this year, complete with a recent raft of poor macro data from the world's second largest economy, have pressured copper prices.
Recent Chinese factory reports have been mixed meanwhile, leaving little to prompt bears or bulls to change track.
A private sector survey of smaller businesses showed factory activity shrank for the first time in seven months in May, while growth in the services sector cooled, taking the gloss off official data on Saturday showing growth at larger enterprises.
But aiding copper, latest data showed LME stocks fell 3,150 tonnes to 614,075 tonnes, their lowest point in almost a month.
While some of the stock moves are a due to warehouses sucking in copper to boost rental revenues, a growing number of analysts
believe the decline also reflects an uptick in real demand.
In other metals traded, stainless steel ingredient nickel was up 0.48 percent to $15,258 a tonne, still boosted by news that Chinese government bodies have bought at least 60,000 tonnes of the metal on international markets this year and are on the prowl for more imports to take advantage of a recent price slide. - Reuters