Metals: Copper hits two-year high, buoyed by BHP bid for Anglo

CIFI Holdings (Group)

29/04/2024 11:28

(Adds ICSG and comment)
    By Pratima Desai
       LONDON, April 29 (Reuters) - Copper prices soared to
two-year highs on Monday, driven by supply concerns highlighted
by BHP Group's  BHP.AX  bid for Anglo American  AAL.L , though
signs of sluggish demand in top consumer China kept prices short
of a record peak.
    Benchmark copper  CMCU3  on the London Metal Exchange (LME)
had advanced 2% to $10,162 a metric ton by 1628 GMT from an
earlier peak of $10,165 a ton, close to the record high of
$10,845 hit in March 2022.
    Traders said sentiment was boosted by Chinese property
developer CIFI Holdings  0884.HK  agreeing a restructuring plan
with bondholders. The slowdown in China's property and
construction sectors have weighed on base metals markets.
    A BHP  BHP.AX  and Anglo American  AAL.L  tie-up would
create an entity that controls 10% of global copper supplies,
surpassing Chile's Codelco and Freeport-McMoRan  FCX.N .
    "It (the bid) shows how valuable copper is going to be for
miners. People are thinking demand is going to grow fast," one
copper trader said. "But unless Chinese demand shows strong
recovery there will be a pullback."
    Copper has been boosted by markets anticipating tight
supplies and growing demand from energy transition applications
such as electric vehicles as well as new technology such as
artificial intelligence and automation.
    Weak Chinese demand can be seen in copper stocks in
warehouses monitored by the Shanghai Futures Exchange, which are
close to four-year highs after rising above 287,000 tons from
around 33,000 tons at the start of this year  CU-STX-SGH .
    The Yangshan premium assessed by SMM  SMM-CUYP-CN  has
dropped to zero for the first time on record, indicating weak
appetite to import copper into China.
        "The surge in copper prices remains puzzling to us as
copper’s fundamentals remain lackluster," said Marex consultant
Edward Meir.
  
        Elsewhere, the International Copper Study Group said the
global copper market 
    faces a surplus
     of 162,000 this year.
  
    The market is awaiting the outcome of this week's U.S.
central bank meeting, with forecasters expecting interest rates
to be kept on hold.
    A softer dollar was supporting industrial metals overall,
traders said.
    Aluminium  CMAL3  rose 0.8% to $2,590 a ton, zinc  CMZN3 
gained 3.7% at $2,950, lead  CMPB3  climbed 1% to $2,230, tin
 CMSN3  was up 0.6% at $32,600 and nickel  CMNI3  advanced 0.5%
to $19,200.
    

 (Reporting by Pratima Desai
Editing by David Goodman and Richard Chang)
 ((pratima.desai@thomsonreuters.com))
 
(( For related news and prices, click on the codes in brackets:
 LME price overview       RING=  COMEX copper futures   0#HG: 
 All metals news          MTL    All commodities news       C  
 Foreign exchange rates  FX=     SPEED GUIDES  LME/INDEX ))