LONDON- Copper prices rebounded as investors bought in at lower prices after heavy losses the previous day, driven by concerns that strong US economic data could spur tighter monetary policy.
Three-month copper on the London Metal Exchange (LME) had gained 1.9 percent to $9,972.50 a ton, having lost as much as 3.8 percent in the previous session.
It extended gains along with stock markets after US jobs data came in weaker than expected, easing fears that the Federal Reserve would withdraw stimulus measures.
Copper hit a record peak of $10,747.50 last month, fueled by optimism over global economic recovery and new demand from an expected green revolution including the shift to electric vehicles.
“It’s bouncing today because of bargain hunting. The overall attitude is still bullish for industrial metals and commodities in general,” said Julius Baer analyst Carsten Menke in Zurich.
“The fundamentals for industrial metals are good, but expectations have been excessive as to where prices should be based on the fundamental backdrop,” Menke added.
In China, prices fell to their lowest in nearly six weeks, with the most-traded July copper contract on the Shanghai Futures Exchange dropping as much as 3.6 percent to 70,470 yuan ($11,001) a ton.
Global copper smelting extended its rebound in May, touching fresh highs for the year as operations continued to take advantage of strong prices, data from satellite surveillance of copper plants showed.
Activity in China was strong at first, but weakened through the month as smelters undertook seasonal maintenance, satellite service SAVANT and broker Marex said in a joint statement on Friday.
“We are now entering a fascinating period, where seasonal declines in smelter activity in China and the rest of Asia are to be expected, and other regions are showing no signs of slowdown,” said Guy Wolf, global head of analytics at Marex, which helped to develop SAVANT.
“Given the importance of Chinese demand, it remains to be seen if the external supply can satisfy China’s demand during this maintenance window.”
Benchmark copper prices on the London Metal Exchange are up 27 percent this year, breaking through $10,000 per ton this month for first time in a decade.
Earth-i, which specializes in geospatial data, launched its SAVANT service late last year, tracking more than 100 smelters representing 80 percent to 90 percent of global production.
It sells data to fund managers, traders and miners and publishes a free monthly index of global copper smelter activity.
Its global dispersion index rose to an average of 49.4 in May from 43.6 a month earlier.
Under SAVANT’s dispersion index, 50 points indicate smelters are operating at the average level of the last 12 months. It also has a second index showing the percentage of active smelters. – Reuters
