London copper climbed on Monday after supply in China’s domestic market tightened, more than offsetting a stronger dollar and expectations of ample supply next year. Global markets are bracing for a slew of data this week that may yield more insight into metals demand, including third quarter U.S. GDP and purchasing managers’ index (PMI) data from several developed economies. “We may have a non-seasonal better pricing going into the end of the year because of the pick-up in China infrastructure and property spending,” said analyst Daniel Hynes of ANZ in Sydney.
Three-month copper on the London Metal Exchange rose 0.6 percent to $4,662 a tonne by 0328 GMT, after posting a small loss in the previous session. LME copper prices hit a one-month low of $4,623.25 a tonne hit on Oct. 14. Shanghai Futures Exchange copper traded up 0.7 percent at 37,370 yuan ($5,517) Improving confidence in China’s economy was adding to metals support, even after China’s offshore yuan slipped to a fresh six-year low against the U.S. dollar. “It’s really a change in market expectations. A weaker CNY now should boost Chinese exports so the benefits outweigh any investment outflow,” said a trader in Singapore.
“At least the market is taking it in this manner now compared to the devaluation shock we had last year when it was risk off.” Still, China’s banking regulator has asked lenders to step up risk management of property loans amid record gains in house prices that have raised concerns of price bubbles and ballooning debts but have also boosted metals demand. Elsewhere, San Francisco Federal Reserve Bank President John Williams on Friday redoubled his call for raising rates soon, telling reporters that “this year would be good” for a rate rise that he had wanted to take effect last month.
Reflecting expectations of ample copper supply, the world’s biggest copper miner, Codelco, has slashed its 2017 physical copper premium to European buyers to the $80 to $85 per tonne range and is offering Chinese buyers a premium of around $70, three traders told Reuters this week. Hedge funds and money managers swung to a net short position of 13,952 lots in copper, U.S. Commodity Futures Trading Commission data showed on Friday. It is the first time the speculator group has been net short in a month.