Copper Continues Partial Bounce

Copper prices continued to move up from Wednesday's seven-week lows during early LME trading on Thursday, but the market remains bruised from the waves of selling this week.

Traders said the bounce reflected technical factors, with chart momentum indicators having veered towards oversold territory this week. "After a fall of over $230 over the last few days the incentive is not there to sell it any more," one trader said.

A modicum of support came from news that that production at the El Teniente mine had been hit by heavy snowfalls.However, that was offset by a 1,625-tonne increase in LME warehouse stocks -- the fourth successive daily rise -- which took the running total this week to 3,200 tonnes.

 

Given the stock increases, which showed signs of becoming the norm, and the summer slowdown, the market might now be tilting into surplus and so have little more on the upside.

News that the Chinese still perceived the market as too expensive, despite a nine percent fall since last Friday, was greeted with some scepticism by traders. "They would say that, wouldn't they. They have been doing a little bit of buying, but not much," one trader noted. Three months prices traded from $2,375 a tonne up to a peak near $2,415 -- a resistance level -- before settling at $2,405, a $32 gain.

Elsewhere, aluminium edged higher, helped by yesterday's forward consumer interest, and was trading at $1,577, up $8. The market was expected to run into resistance around $1,600 once again.

Nickel eased back to $7,010, a loss of $40, and was now vulnerable to a lurch under $7,000.