Supply disruption in top producer Chile, solid demand in top consumer China and dwindling stockpiles kept copper prices near five-month highs on Monday.
Benchmark copper on the London Metal Exchange (LME) was up 0.1 per cent at $US5,963 a tonne at 1615 GMT, close to Friday’s peak of $US6,006.
The metal used in power and construction has risen by about 35 per cent from March lows, recouping almost all ground lost during the first stages of the coronavirus outbreak.
However, supply and demand fundamentals suggest a fair price for copper around $US5,500, with lower Chilean output offset by weak demand outside China, said independent analyst Robin Bhar.
Chile’s copper output could decline by 200,000 tonnes, or 3.5 per cent of 2019 production, as coronavirus cases rise, its mines minister said.
Profits at China’s industrial companies rose for the first time in six months in May. Chinese factory activity is likely to have grown for a fourth month running June but the pace may be waning, a Reuters poll showed.
Global stock markets rose despite the worldwide death toll from COVID-19 surpassing half a million on Sunday, with 10.1 million reported cases.
On-warrant copper inventories in LME-registered warehouses fell by 2,450 tonnes to 112,850 tonnes, the lowest since January 17. Stocks in Shanghai Futures Exchange (ShFE) warehouses, at 99,971 tonnes, are the lowest since January 2019.
In a sign of tighter nearby supply, the discount for cash copper versus three-month metal on the LME fell to $US5-$US10 from $US30 earlier this month.
LME copper could test Fibonacci and downtrend resistance around $US6,075 a tonne and a break above this could open the way towards $US6,343, said Reuters technical analyst Wang Tao.
LME aluminium was up 0.6 per cent at $US1,610.50 a tonne, zinc rose 0.9 per cent to $US2,057, nickel added 1.1 per cent to $US12,825, lead gained 0.7 per cent to $US1,799 and tin was down 0.2 per cent at $US16,776.