November 21, 2018 / 10:42 AM / 20 days ago

METALS-Softer dollar, higher equities spur gains in copper

    * Strong support for copper at $6,150-$6,160
    * Premium for zinc cash over 3-month at 21-year high

 (Updates with closing prices)
    By Pratima Desai
    LONDON, Nov 21 (Reuters) - Copper prices rose on Wednesday
as a lower dollar and higher equities triggered fund buying, but
worries about the U.S.-China trade dispute and about demand
growth in top consumer China are expected to cap gains.
    Benchmark copper         on the London Metal Exchange ended
0.8 percent higher at $6,235 a tonne. The price of the metal,
used widely in the power and construction industries, hit a
two-week high of $6,296 on Tuesday.
    "The weaker dollar and the stock market recovery are
supporting factors," a commodity-focused fund manager said.
    "Fears about global growth due to the trade dispute will be
a negative for all assets that rely on growth."
    
    TRADE: Worries about trade were further reinforced after the
U.S. said China has failed to alter its "unfair" practices,
ahead of a meeting next week between U.S. President Donald Trump
and Chinese President Xi Jinping.             
    DOLLAR: A fall in the dollar, which makes dollar-priced
commodities cheaper for holders of other currencies, was helping
industrial metals. The relationship is used by funds known as
commodity trading advisors (CTAs) which trade using buy and sell
signals from numerical models.
    POSITIONS: Traders are keeping a close eye on positions
holding large amounts of LME copper warrants and cash contracts,
which is fuelling nervousness about nearby availability.
    This can be seen in the premium for the copper cash and
three-month contract, now around $22 a tonne CMCU0-3.
    CHINA: The country accounts for nearly half of global
demand, which is estimated at around 24 million tonnes this
year.
    "Fundamentals are little changed, amid steady demand and
somewhat sluggish supply, resulting in a broadly balanced
market," Barclays analysts said in a note. "We forecast China to
slow but not collapse and this to lead to lower rates of demand
growth from a very large absolute base."
    BALANCE: A recent Reuters survey showed the copper market
was expected to see a small surplus of 13,500 tonnes this year
and a small deficit of 44,000 tonnes in 2019.                  
    TECHNICALS: Strong support for copper comes in at
$6,150-$6,160, near the 21-, 55- and 100-day moving averages.
    ZINC: The premium for the zinc cash contract over the
three-month contract MZN0-3 hit a 21-year high of $97 a tonne
due to falling stocks in LME-registered warehouses on Tuesday.
It was trading around $94 on Wednesday.             
    At 123,275 tonnes, stocks have more than halved since Aug.
13. MZNSTX-TOTAL
    The three-month zinc         price closed 0.7 percent higher
at $2,568 a tonne. 
    PRICES: Aluminium         rose 0.7 percent to $1,953.5, lead
        added 2.3 percent to $2,006 and tin         slipped 0.8
percent to $19,240. Nickel         fell 0.7 percent to $11,020
after hitting an 11-month low at $11,010 during the session.

    
 (Reporting by Pratima Desai; editing by David Evans, Jane
Merriman and Kevin Liffey)
  
 
 
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