HANOI- Copper futures advanced in London on Wednesday buoyed by hopes of rising demand, but prices in Shanghai fell on fears of policy tightening by top consumer China.
Three-month copper on the London Metal Exchange advanced 0.9 percent to $8,859.50 a ton, while the most-traded April copper contract on the Shanghai Futures Exchange fell 1.4 percent to 65,720 yuan ($10,093.84) a ton.
Copper is pegged by analysts to benefit from a global economic recovery and rising demand from green investments, but possible policy tightening in China could put a lid on a sustained economic recovery and inflows into financial markets.
“Metals are hostage to large moves in the macro space, with a rotation going on into cyclical assets, but …fears of asset bubbles have slammed Chinese equity markets hard,” said commodities broker Anna Stablum of Marex Spectron, adding, upcoming sessions are likely to be volatile.
“We might start to see some downstream copper users be more willing to come in and purchase metal after the latest price drop, but most likely we will need to see prices stablise first. The rapid increase we saw in February did deter physical users from buying.”
The head of China’s base metals body warned of the risk of speculators driving prices away from fundamentals, adding that sharp fluctuations would “do more harm than good”. – Reuters