METALS-Copper claws higher on China data; inventories weigh
(Updates with official prices)
LONDON, Sept 30 (Reuters) – Copper prices struggled to hold gains on Wednesday as surging inventories highlighted the prospect of excess supply amid worries about the impact of rising COVID-19 cases on the global economy.
Copper fluctuated between modest losses and gains after China’s factory activity extended solid growth in September, underlining a steady economic recovery from the coronavirus shock.
“The data overnight shows China is clearly improving, but at the same time so has the data in terms of available copper stocks over the past few days,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“That tightness was a key fundamental support that helped the market rally, but that seems to have evaporated within just a few days. Copper is likely to struggle, at least in the short term, and faces the risk of a deeper correction.”
Three-month copper on the London Metal Exchange rose 0.5% to $6,612 a tonne in official trading, having earlier slipped as low as $6,563. It is set for the first monthly loss since March.
Looking at chart levels, LME copper is vulnerable because it has broken the uptrend that had been in place since March and faces resistance at $6,650, Hansen added.
The most-traded November copper contract on the Shanghai Futures Exchange closed down 0.2% at 50,930 yuan ($7,482.66) a tonne.
Chinese markets will be closed Oct. 1-8 for the Golden Week holiday.
* LME copper stocks MCUSTX-TOTAL surged by nearly 30,000 tonnes to 165,600, data showed on Wednesday, and have more than doubled over the past week.
* Also weighing on the market was a stronger U.S. dollar , which makes greenback-priced metals more expensive to buyers using other currencies.
* Nickel smelting park PT Indonesia Weda Bay Industrial Park expects next year to double its current capacity of 110,000 tonnes of nickel content per year.
* LME aluminium fell 0.7% to $1,770.50 a tonne in official activity and zinc edged up 0.1% to $2,426.50.
Lead shed 1.3% to $1,821.50 after touching a two-month low of $1,816, nickel lost 0.2% to $14,423 and tin added 0.2% to $17,494.
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