According to Mining News Pro - * LME copper cancelled warrants at 50 percent of total
* Discount for cash over 3-month copper narrows further
(Recasts, adds comment, changes dateline from Singapore)
By Pratima Desai
LONDON, Aug 28 (Reuters) - Copper prices climbed to two-week
highs on Tuesday as the U.S.-Mexico trade deal raised hopes for
an agreement between the United States and China and as the
dollar slipped.
Benchmark copper on the London Metal Exchange was up
0.8 percent at $6,151 a tonne at 1029 GMT from an earlier
session high at $6,160. It is up nearly six percent since
crashing to a 14-month low of $5,773 a tonne on Aug. 15.
"The agreement with Mexico is part of it, though there is no
fundamental link between U.S.-Mexico negotiations and industrial
metals, and the dollar is softer again," said Julius Baer
analyst Carsten Menke.
"Striking a deal with China will be much more difficult."
MEXICO: the United States and Mexico agreed on Monday to
overhaul the North American Free Trade Agreement (NAFTA),
putting pressure on Canada to agree to new terms on auto trade
and dispute settlement rules to remain part of the three-nation
pact.
DOLLAR: The lower U.S. currency makes dollar-denominated
metals cheaper for non-U.S. firms, which potentially should
boost demand.
CHINA: China is the world`s largest copper consumer,
accounting for nearly half of global demand at around 24 million
tonnes. Ample supplies and worries about Chinese demand are why
funds have short positions or bets on lower prices.
"Risk factors like the possibility of strikes at copper
mines in Chile have been averted," Menke said.
COPPER SHORTS: "The copper net speculative short position
climbed week-on-week to 23 percent of open interest or 38,000
lots," Marex Spectron analysts said in a note.
"This is still lighter than the recent peak short of 30
percent of open interest registered on the 19th July, which goes
back to January 2016 levels."
STOCKS: Cancelled warrants or metal earmarked for delivery
in warehouses registered with the LME have surged to a one-year
high at 132,200 tonnes, nearly 50 percent of the total at
268,175 tonnes. Cancelled warrants on Aug. 16 were below 25,000 tonnes.
SHFE ARBITRAGE: Traders say the cancelled metal is heading
for China as prices in Shanghai Futures Exchange at around
$7,150 a tonne are much higher than on the LME and the
gap is wide enough to cover shipping, taxes and make a profit.
SPREADS: Worries about shortages on the LME market have seen
the discount for the cash over the three-month contract narrow
to below $14 a tonne from $42 a tonne on Aug. 15. PRICES: Aluminium was
up 1.8 percent at $2,132, zinc rose 0.4 percent to $2,543, lead gained
0.4
percent to $2,094, tin added 0.7 percent to $19,130 and
nickel climbed 1.0 percent to $13,555.
(Reporting by Pratima Desai; editing by Susan Fenton)
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