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China demand hopes hold copper prices steady

Copper prices steadied on Tuesday as prospects of stronger demand from top consumer China triggered short-covering ahead of a speech from Federal Reserve Chair Jerome Powell, which could indicate timing of interest rate cuts and dollar direction.

Benchmark copper CMCU3 on the London Metal Exchange (LME) was up 0.1% at $9,927 a metric ton by 1021 GMT.

It has gained 5% since June 27, partly owing to a weaker U.S. currency, which makes dollar-priced metals cheaper for holders of other currencies.

Fuelling optimism over demand in China is the Communist Party’s long-delayed third plenum from July 15-18, expected to focus on economic policy and reforms.

“Most copper bulls that we’ve met this past week are waiting for a China-related stimulus event to stir up copper trade,” said Panmure Gordon analyst Tom Price.

“If China does deliver stimulus within the coming months, it will probably be entirely property focused and modest, only intended to support the sector, at least until all existing projects are delivered to paying consumers.”

The looming data on China’s yuan loans and total social financing, widely watched by metals analysts, could yield clues to future industrial metals demand.

Clouding the outlook, however, are copper inventories MCUSTX-TOTAL in LME aproved warehouses, which have climbed above 191,000 tons to their highest since October 2022 and nearly double levels in mid-May.

Most of those deliveries are to warehouses in Asia and of Chinese origin.

Climbing stocks are behind the discount for cash copper over the three-month contract CMCU, which has reached record levels above $150 a ton.

In other metals, aluminium CMAL3 eased by 0.2% to $2,526 a ton, zinc CMZN3 slipped 0.5% to $2,940, lead CMPB3 retreated 0.9% to $2,211, tin was up 0.2% at $34,275 and nickel CMNI3 fell 1.1% to $17,280.
Source: Reuters (Reporting by Pratima Desai, Editing by David Goodman)

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