London Metal Exchange copper futures rebounded on Friday after falling more than 1 percent in the previous session, extending a pattern of consolidation as optimism that U.S. politicians would reach a deal to avert a federal default and investors adjusted positions ahead of the weekend. Prices remained within recent trading ranges.
Copper for three-month delivery on the LME rose $79, or 0.97%, to $8.251.50 a tonne at 17:00 London time (00:00 Beijing time) on May 19.
In positive news, broader financial markets were higher after Democratic negotiators told President Joe Biden on Friday that "steady progress" was being made in debt ceiling talks with Republicans. Late on Friday, the top Republican negotiator said the talks had been suspended, while the White House said a deal was still possible. Nitesh Shah, commodity strategist at WisdomTree, said, "We've seen this many times before; Both parties showed some brinkmanship, but then came together to make a deal." A slight weakening in the dollar index, which makes dollar-priced goods cheaper for buyers using other currencies, also helped support the market. The market was also boosted by some speculators closing short-term bearish positions ahead of the weekend.
On the supply and demand side, LME copper inventories added 1,450 tonnes to 91,975 tonnes, with the rise coming from Asian warehouses. China produced 1.059 million tons of refined copper (electrolytic copper) in April, up 14.1 percent year on year, according to data released by the National Bureau of Statistics on Friday. The output of refined copper (electrolytic copper) from January to April was 4.111,000 tons, up 12.9 percent year on year.
Looking ahead, analysts said weak demand from China and a possible recession in the US and Europe would keep copper markets facing headwinds in the coming weeks. "Weak demand from China, a stronger dollar on the back of strong U.S. economic data and hawkish comments from the Fed have pressured copper and commodity prices in general," said Sabrin Chowdhury, head of commodities at BMI. Copper, a gauge of economic health, has fallen nearly 15 per cent from its January high.
