Copper rises after Greek vote, capped by firmer dollar

By: | Published: July 17, 2015 7:40 AM

Copper rose on Thursday after Greek lawmakers passed a tough bailout programme and the Chinese stock market stabilised, but gains were capped by a stronger dollar and continued concern about global growth.

Copper rose on Thursday after Greek lawmakers passed a tough bailout programme and the Chinese stock market stabilised, but gains were capped by a stronger dollar and continued concern about global growth.

While the Greek parliament approved austerity measures demanded by its creditors, Germany’s finance minister questioned whether Athens would ever get a third bailout.

“There may be some short-term fixes on Greece, but in the longer term, markets are still going to see it as a bit of a headwind to growth overall,” said Robin Bhar, head of metals research at Societe Generale in London.

Three-month copper on the London Metal Exchange climbed 0.6 percent to $5,565 a tonne by 1013 GMT. Prices are struggling to regain upward momentum after plunging to a six- year low of $5,240 a tonne last week.

A stronger dollar added headwinds to metals prices, by making the sector more expensive for buyers holding other currencies, after the Fed Chair repeated her view that the Fed will likely hike interest rates later this year if the U.S. economy expands as expected.

“There are still growth headwinds, currency headwinds, so prices will struggle to maintain rallies. This risk-on, risk-off mentality will characterise our summer period and the weeks ahead of us look to be pretty choppy,” Bhar said.

China stocks rebounded on Thursday, but traders were still cautious about whether Beijing could contain its volatile equities market after last week’s crash, even as green shoots emerged from its beaten down property market that could bolster demand later in the year. ID:nZZN2RI200]

“We believe the stabilisation and continuous recovery in the housing sector will be the key to spur new demand for commodities and ease overcapacity concerns,” Helen Lau of Argonaut Securities in Hong Kong said in a note.

“China’s government has room for more monetary easing and fiscal stimulus. We believe the current commodities prices and share prices of commodity stocks (has) reached the bottom.”

In other metals, LME nickel gained 0.7 percent to $11,575 a tonne.

“The most significant development at the moment, I think, is not nickel prices having hit six-year lows, but after LME stocks having increased at a breakneck pace since 2012, this month has shown the first sign of a drawdown of these stocks,” Thomas Hohne-Sparborth of consultancy Roskill told the Reuters Global Base Metals Forum.

He forecasts prices recovering to $16,000 by December.

PRICES

Three month LME copper

Most active ShFE copper

Three month LME aluminium

Most active ShFE aluminium

Three month LME zinc

Most active ShFE zinc

Three month LME lead

Most active ShFE lead

Three month LME nickel

Most active ShFE nickel

Three month LME tin

Most active ShFE tin

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