Copper struggled to hold onto gains above $US6,000 on Wednesday after the U.S. dollar rose but higher steel prices and upbeat Chinese data boosted expectations of strong demand.
Benchmark copper on the London Metal Exchange ended 0.2 per cent lower at $US5,966.
It hit $US6,022.50 on Monday, the highest since March 2, driven by upbeat Chinese economic data.
“There has been lots of positive sentiment from China but the dollar is countering that positive sentiment,” said Danske Bank analyst Jens Pedersen.
“Copper is struggling to make a clean break from the $6,000 psychological level.”
STEEL: China’s iron ore futures hit their highest in 2-1/2 months on Wednesday as speculators added bullish bets and shorts continued to cover their positions on expectations of strong demand from steel mills.
CHINA DATA: A pick-up in the industrial sector helped China post better than expected second-quarter economic growth as finance and real estate expansions slowed to multi-year lows.
DOLLAR: The U.S. dollar firmed, making dollar-denominated commodities slightly more expensive for holders of other currencies and potentially curbing demand. The greenback was still near 10-month lows, though.
SUPPLY: Workers at Chile’s Zaldivar copper mine, owned by Antofagasta PLC, will vote on a new contract offer later this week after a vote to strike last week prompted government-mediated negotiations.
PERU SUPPLY: Unionised workers at mines in Peru, the world’s second-biggest copper producer, started an indefinite, nationwide strike on Wednesday to protest the government’s proposed labour reforms.
STOCKS: Copper inventories in LME-registered warehouses inched up 1,975 tonnes to 309,250 tonnes on Wednesday. They have increased 27 per cent since June 29.
TECHNICALS: “Copper is trapped in a tight range. It is pricing well but not really getting on with it,” said Marex Spectron’s head of metal sales Matt France.
COPPER OUTLOOK: “This is as good as it gets for Chinese data,” Capital Economics analyst Caroline Bain said.
“There has been a tightening of policy in the first half of this year and we expect that to lead to somewhat lower activity in the second half.”
BHP SUPPLY: Miner BHP Billiton said its annual copper production of 1.3 million tonnes fell short of its target due to a strike at its giant Escondida mine. It expects to mine between 1.65-1.79 million tonnes in 2018.
PRICES: Aluminium ended 0.7 per cent lower at $US1,920 tonnes, lead fell 2.5 per cent to $US2,217, tin added 0.5 per cent to reach $US20,095, zinc eased 1.7 per cent to $US2,747 while nickel fell 1.3 per cent to $US9,650.