Copper set for best quarter in a decade on China rebound

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LONDON (June 30): Copper prices headed for their biggest quarterly rise in ten years on Tuesday, as resurgent Chinese demand, supply disruption and global stimulus fed a bounce from March's four-year lows.

Benchmark copper on the London Metal Exchange (LME) was up 1% at US$6,018.50 a tonne at 1600 GMT, after hitting its highest level since Jan 23.

The metal used in power and construction is up around 22% in the last three months and is now just below its January high of US$6,343, before the coronavirus spread worldwide.

Behind the gains are "supply fears driven by coronavirus spreading in major copper-producing countries like Chile and Peru (and) the recovering economy, above all in China," said Commerzbank analyst Daniel Briesemann.

A close above US$6,000 could fuel further buying, but supply and demand fundamentals justify a level around US$5,500 and prices will eventually fall, he added.

CHINA: Factory activity in China quickened in June, beating expectations. The total new orders index also brightened, but export orders continued to contract and factories cut jobs.

STOCKS: On-warrant copper inventories in LME-registered warehouses fell by 1,200 tonnes to 111,650, the lowest since Jan 17.

Stocks in Shanghai Futures Exchange (ShFE) warehouses at 99,971 tonnes are the lowest since January 2019. 

SUPPLY: Freeport Indonesia's production of copper concentrate and copper ore were both below its initial targets this year.

POSITIONING: Speculators are betting on higher copper prices, with a net long on the LME equal to 3.6% of active contracts by Friday, the biggest since January, brokers Marex Spectron said.

OTHER METALS: LME aluminium was up 0.5% at US$1,617 a tonne, zinc fell 0.9% to US$2,044, nickel was flat at US$12,810, lead slipped 1.4% to US$1,777 and tin was down 0.4% at $16,705.

All were up between 2% and 14% in the second quarter.