Copper prices rose on Friday as a weaker dollar and robust new loans data from China reinforced expectations of healthy demand during the seasonally strong second quarter.
Benchmark copper on the London Metal Exchange closed 1.2 percent up at $6,484 a tonne. Prices of the metal used widely in power and construction have mostly traded in a range between $6,350 and $6,550 since the middle of February.
“We expect copper prices to touch $6,700 within three months,” said Citi analyst Oliver Nugent, adding that the loan numbers had stimulated further buying and that data would confirm an improvement over the coming weeks.
“The first Chinese ‘hard’ data for March – Citi’s proprietary China construction machinery usage indicator – pointed to a major improvement in construction activity, the strongest in five months.”
LOANS: Chinese new bank loans rose more than expected in March as policymakers pushed lenders to support struggling smaller companies and shore up the slowing economy.
Chinese banks extended 1.69 trillion yuan ($251.6 billion) in net new yuan loans in March, compared with expectations of 1.2 trillion yuan in a Reuters poll.
FUNDS: A lower U.S. currency makes dollar-denominated commodities cheaper for holders of other currencies, which could boost metals demand and prices. This relationship is used by funds to generate buy and sell signals.
HARD DATA: Chinese industrial production data, construction activity and investment numbers are due next week.
Companies stock up on raw materials in the second quarter ahead of rising construction activity in the third.
CHINA IMPORTS: China imported 391,000 tonnes of unwrought copper last month, up 25.7 percent from 311,000 tonnes in February and 26.5 percent higher than March 2018.
TECHNICALS: Traders say the first upside barrier for copper is $6,555, the high from March 21. Support comes in at $6,425, the 21-day moving average, followed by $6,350, the fifty-day moving average.
NICKEL: Prices came under pressure in early trading from purchases of put options — which give the buyer the right to sell at a fixed price and time in the future — at prices between $12,200-$12,400, traders said. However, nickel recovered from a session low of $12,885 to end at $12,980, up 0.7 percent.
“Fundamentals continue to support nickel in view of the rebound of Chinese stainless steel production in March,” said Argonaut Securities analyst Helen Lau. Supporting nickel are inventories in LME-approved warehouses, which at 178,866 tonnes are about half the levels at the start of last year. MNISTX-TOTAL
PRICES: Aluminium added 0.2 percent to $1,863, zinc advanced 2.2 percent to $2,928, lead was little changed at $1,925 and tin firmed by 0.4 percent to $20,600 a tonne.
Yaang Pipe Industry Co., Limited (www.yaang.com)