London, June 9 (Xinhua) -- Copper futures on the London Metal Exchange (LME) rose slightly on Wednesday, but continued to hover below the $10,000 mark. With Chinese factories facing their worst rise in raw material costs in 12 years, this could lead to increased monitoring of rising commodity prices in China, weighing on sentiment.
Benchmark copper for three-month delivery on the LME was up $3.50 at $9,967.5 a tonne by 16:25 GMT, 7.3 percent below the all-time high of $10,747.5 a tonne set intraday on May 10.
The producer price index rose 9.0% in May from a year earlier to a 12-1/2 year high, the National Bureau of Statistics said Wednesday. That beat analysts' expectations of 8.5% and was the highest since September 2008. It was 1.6% higher than in April.
This reflects a sharp rise in the cost of raw materials, which Chinese factories are struggling to absorb and are starting to pass on higher raw material costs to end customers.
On Wednesday, after the NBS data was released, the NDRC said it would study further strengthening inspection, early warning and market supervision of commodity prices. ING analysts noted that Beijing's talk of controlling commodity price rises could take some of the speculative wind out of the market, but it is unlikely to have a significant impact on prices. At present, the copper market is in a consolidation mode. The demand side remains supportive of copper prices, with little room for downside, given infrastructure construction in the US and China.
On Wednesday, global stocks hovered near record highs and U.S. bond yields fell as the future of some of President Joe Biden's stimulus measures appeared to be in jeopardy.
On Thursday, the U.S. will release consumer price data for May, a key gauge of inflation. Traders were looking to the data for guidance on whether the Federal Reserve might end its ultra-loose monetary policy sooner rather than later. Also on Thursday, the European Central Bank meets.
From the trend of the fund, speculative funds began to reduce bets on copper prices up. As of Monday, speculative funds' net long positions on LME copper had fallen to 20% of their short positions.
On news, workers at BHP Billiton's Spence copper mine in Chile said talks with management would be extended for a few more days to avoid a strike.
On Wednesday, LME aluminum fell 0.1 percent to $2,450 a metric ton. Spot aluminum traded at a premium of $11.80 to three-month aluminum, down from a $30 discount two weeks ago, the highest premium since 2019 and a sign of near-term supply tightening.
LME tin rose 0.1 percent to $31,255 a tonne after hitting a 10-year high on Tuesday. The producer, Malaysia Smelting Corporation (MSC), said it had suspended operations and declared force majeure.
Among other metals, LME zinc was flat at $3,015.50 a tonne, nickel was up 1.1 percent at $18,130 a tonne and lead was up 0.5 percent at $2,194 a tonne.
