Copper rises after China support news, but nerves over Iran strikes persist
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Copper edged higher on Thursday following news of fresh efforts by top metals consumer China to boost its economy, but investors were wary after an escalation in the Middle East conflict.
Three-month copper on the London Metal Exchange added 0.3% to $13,568 a metric ton in official open-outcry trading after slipping to its lowest level since May 21 at $13,464. Sources told Reuters that China's central bank has instructed banks to boost lending this month, underscoring Beijing's continued efforts to support an economy squeezed by higher energy costs and stubbornly weak domestic demand. Oil prices rose and stocks retreated after a fresh U.S. military strike on Iran dented investor confidence that the two sides will be able to hammer out a peace deal.
"Copper is under pressure alongside the broader base metals complex, as geopolitical uncertainty dents macro sentiment," said Ewa Manthey, commodities strategist at ING.
Investors are seeking to balance the potential of weaker metals demand, as the conflict cuts economic growth, against the prospect of copper shortages due to the lack of sulphuric acid.
U.S. Comex copper futures dipped 0.1% to $6.37 a lb, bringing the premium of Comex over LME copper to 3.4% or $456 a ton. Traders have been steadily shipping copper to the U.S. ahead of a decision expected at the end of June about whether to impose tariffs on refined copper.
"Tariff expectations are once again pulling metal into the U.S., tightening availability elsewhere and adding another layer of distortion to the market," Manthey said.
The U.S. dollar index was just off its strongest level since early April, making greenback-priced commodities more expensive for buyers using other currencies.
LME lead fell 0.8% in official activity to $1,990 a ton after LME inventory data on Thursday showed inflows of nearly 30,000 tons of metal into warehouses in Taiwan.
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