London - Copper steadied on Thursday after hitting a two-week low as investors bet on improved imports by China, although worries about the United States curbing its monetary stimulus programme kept gains in check.
Three-month copper on the London Metal Exchange hit its lowest since May 16 at $7,198.75 a tonne. It traded up 0.28 percent at $7,285 a tonne in official midday rings, recovering from an almost 1 percent drop in the prior session.
Lending copper some support, premiums for bonded copper in Shanghai were heard as high as $150, according to China price provider SMM. Also, some Shanghai traders were said to be betting copper imports from China, which accounts for around 40 percent of the world's copper consumption, will pick up in May.
(http://www.smm.cn/yangshan/index.php)
“The arbitrage between the LME and Shanghai (copper) did open up this week. I suspect we will see a bit more Chinese buying, maybe also on the back of this supposed tightness in scrap,” said Citi analyst David Wilson.
But he added: “I think it's a tad artificial. Prices are not going anywhere because macro data in China is not showing any acceleration in activity. Copper in no man's land, there's no big directional story.”
Copper prices have fallen 9 percent for the year on worries over less-than-stellar growth in China. They have been pegged for the past month between $7,100 and $7,500 a tonne.
The US job market and the economy as a whole may be strong enough in a few months' time to allow the Federal Reserve to pare its bond-buying by a small amount, one of the central bank's most dovish policymakers said on Wednesday.
Uncertainty over the timing of any shift in policy left the dollar broadly weaker versus a currency basket, and versus the euro. A weak dollar makes dollar-priced metals cheaper for European and other non-US investors.
Economist Alexandra Knight at National Australia Bank in Melbourne said markets were worried an earlier-than-expected end to bond buying could erode copper demand in the United States as well as in China.
“Still, you're seeing things improve in the US and the longer term story is that should be supportive to prices,” she added.
Also propping up copper, workers at Freeport McMoRan Copper and Gold Inc The global copper market has been keeping an eye on the closure at the world's second largest copper mine, which has helped underpin metal prices, but only a prolonged shutdown will hit world supplies, which are still seen in a small surplus this year.
Battery material lead showed the strongest gains on the LME, and was last bid up 0.89 percent in rings to $2,145 a tonne, with LME data showing stocks dropped by 2,925 tonnes to 222,225 tonnes, their lowest since January 2009. -Reuters