Copper recovers from early losses while closing higher in Shanghai, despite rising inventories

Copper recovered from early losses on Monday, with Shanghai futures closing higher and London prices returning to nearly flat, even as rising exchange inventories and easing tightness in nearby LME supplies kept gains in check. Three-month copper on the London Metal Exchange was nearly unchanged at $14,216.50 a metric ton, up just 0.01% by 0731 GMT, recovering from a decline of more than 0.5% earlier during this session. The most-traded September copper contract on the Shanghai Futures Exchange closed at 108,110 yuan ($16,080.62) a ton, up 0.76% from Friday's settlement. The recovery came despite further signs that the acute tightness in immediately available copper seen on the LME last week was continuing to ease. "The acute tightness on the LME has passed, but the U.S. pull on copper remains and China's domestic supply growth is limited," Chinese broker Galaxy Futures said. The broker said fundamentals remained supportive despite the post-delivery inventory build, although downstream demand weakened when Shanghai copper traded above 107,500 yuan a ton. The premium of cash copper over three-month copper narrowed further to around $53 a ton on Monday, from $61.32 at Friday's close and as much as $545 a ton a week earlier. Copper inventories in LME-monitored warehouses slipped 0.56% to 238,575 tons in the latest data, but remained about 16% above the 204,975 tons recorded on Aug 14. Inventories in warehouses monitored by the Shanghai Futures Exchange also rose sharply last week, jumping 28.4% to 89,548 tons on Friday. On-warrant copper stocks increased by 12,429 tons to 46,105 tons. The U.S. dollar edged higher on Monday but remained near multi-month lows after falling sharply last week. A stronger dollar makes greenback-priced metals more expensive for holders of other currencies. The market will monitor this week's Jackson Hole meeting and the Federal Reserve Chair's speech for more interest-rate clues. Among other LME metals, aluminium rose 0.45%, zinc gained 0.64%, lead added 0.34% and tin rose 0.04%. On the SHFE, aluminium rose 0.61%, zinc gained 1.05% and lead added 0.50%, while tin slipped 0.14%.