By Jim Williams
Copper rose to its highest price in two weeks in early morning trading Wednesday on expectations that Britain will vote to remain in the European Union.
Three-month copper on the London Metal Exchange (LME) topped out at $4,725 a ton in early trading. That’s the highest since June 6. The price of the red metal settled down a little from there to $4,716 at the time of this report.
“Investors remain cautious despite recent polls suggesting the chances of the UK leaving the EU had fallen,” ANZ said in a commodity note.
Don’t Forget About China
While all eyes are on Britain and Thursday’s vote for the global economy, China remains the key player when it comes to the copper market. The red metal’s outlook has been bleak recently based on a surplus of supply, leading traders to predict prices will fall. China exported 84,959 tons of copper in May. That is up by 256 percent from the same month last year, overshadowing a 15.9 per cent rise in imports.
“The (export) jump has largely been prompted by Chinese refiners shipping metal into the bonded warehouse network, which is in turn being exported in order to keep the domestic market tight amid rising domestic refined production, which has … supported the draw downs in ShFE copper inventories,” Citi said in a note.
“All these Chinese copper exports are probably going to the LME so there are market fears that rising LME copper inventories will weigh on sentiment,” said Xiao Fu, head of commodity market strategy at Bank of China International in London. “Earlier this year, China had restocked a significant amount of copper and now there is destocking or normalization, driving this rotation of Shanghai inventories to the LME.”
China is reportedly considering allowing local commercial banks to participate in offshore yuan trade, the central bank said, as the country looks to project greater influence in the offshore currency market.
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