MUMBAI, 3 Jun (Commoditiescontrol): On Monday, London Metal Exchange (LME) copper prices saw a notable rise, driven by a private sector survey indicating robust factory activity in China, the top global consumer, and stabilizing U.S. inflation, which supports the Federal Reserve's plans to cut interest rates later this year.
Three-month copper on the LME had advanced by 0.4%, reaching $10,075 per metric ton. In contrast, the most-traded July copper contract on the Shanghai Futures Exchange (SHFE) experienced a slight decline, easing 0.9% to 81,510 yuan ($11,249.74) per ton.
China’s manufacturing sector showed impressive growth in May, expanding at the fastest pace in nearly two years. This surge was led by smaller, export-oriented firms, as reported by a private sector survey, even as the broader official purchasing managers' index unexpectedly fell. This sector is a significant consumer of metals, driving demand for copper.
Contributing to the upward momentum, a softer dollar made metals priced in greenbacks cheaper for holders of other currencies. Recent data indicated that U.S. inflation stabilized in April, which aligns with the Federal Reserve's potential rate cut later this year.
Physical demand signals also showed some improvement; the discount for importing copper into China narrowed to $10 per ton on Friday, from $20 on May 22. Despite this, overall consumption remained weak due to high and volatile prices.
Analysts suggest that copper prices might face a short-term correction as spot demand lags behind positive macroeconomic indicators. Nevertheless, any significant price decline is expected to be limited due to tight raw material supply.
In other LME metals, aluminium eased 0.4% to $2,642.50 per ton, nickel slipped 0.2% to $19,675, zinc dropped 0.2% to $2,965, while lead climbed 0.4% to $2,282.50, and tin decreased by 0.9% to $32,750. Meanwhile, on the SHFE, aluminium fell 1.6% to 21,100 yuan per ton, nickel declined 1.6% to 148,060 yuan, zinc decreased 2.1% to 24,255 yuan, tin fell 2% to 268,280 yuan, and lead increased 0.2% to 18,805 yuan.
Overall, the copper market remains dynamic with potential bullish trends tempered by spot demand challenges and supply constraints.
(By Commoditiescontrol Bureau; +91 98201 3018)
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