Base metal prices settle higher in global markets

Copper prices jumped $159.00 or 3.08 percent to settle at $5,319.00 per MT at the London Metal Exchange (LME). The metal has been pressured by concerns about slowing demand growth in China, which accounts for nearly half of global copper consumption.

According to the newspaper, Rio’s head of copper and coal, Jean-Sebastien Jacques, said the current copper price was not an accurate reflection of the metal’s “fundamentals”, but it would be illogical for Rio, which has low-priced assets, to cut production. Glencore also said last month it was suspending a few of its copper operations in the Democratic Republic of Congo and Zambia for 18 months, removing 400,000 tonnes of cathode from the market.

For years, a copper replica of Wall Street’s Charging Bull sculpture stood in the lobby at the London offices of Red Kite Group, one of the biggest metals hedge funds.

“Generally speaking, most of the metals are now pushing up to recent resistance levels, which will create somewhat of a make-or-break week for the markets”, Malcolm Freeman of Kingdom Futures said.

Proactive Investors Australia is the market leader in producing news, articles and research reports on ASX emerging companies with distribution in Australia, UK, North America and Hong Kong / China. Further, project deferrals and capital expenditure cuts will dent supply growth.

“On Chinese copper demand, domestic wire and cable orders have picked up in September, leading to steady bonded inventory draws”.

“We continue to strongly recommend producers increase the hedging of their copper exposure and investors either reduce long exposure or take out long-dated short exposures in copper”, Goldman Sachs analyst Max Layton said in the report. Aluminium will be the under-performer and prices may fall by another four per cent. Lead will struggle with sluggish demand growth, while zinc, previously widely tipped as a strong performer on mine closures, will post only modest gains of less than two per cent.

“Our view is that the nickel price will hit at least US$20,000-US$25,000 a tonne before March 2017, and the lower Australian dollar will help local producers also”. Overall, the landscape for the mining sector looks rugged.

“With the nickel-based stainless steel demand picking up, we expect the calendar spread to decline and thus prices may see an upside”.

It said copper was at the bottom of the price cycle and it expected it to turn a corner by early 2016 when output contracts by 100,000 tonnes.

Weak data from the world’s second largest economy has also fuelled expectations for more stimulus measures, including a boost to infrastructure spending that could support metals demand.