Singapore/Beijing: London copper prices crept forward for a third straight session on Thursday as China’s move to inject liquidity into the financial system boosted expectations of higher demand in the world’s top industrial metals consumer.
The People’s Bank of China is injecting ¥250 billion ($37 billion) through seven-day reverse bond repurchase agreements and ¥150 billion through 28-day reverse repos, traders said.
Shanghai copper has flipped into backwardation amid a promise of value-added tax (VAT) cuts in China, which has increased near-term demand for physical copper, brokerage Jinrui Futures said in a note.
The tax reductions are not expected to be formalised until March but Jinrui Futures said their implementation could result in a ¥400 a tonne boost to the ShFE copper price for every percentage point VAT decrease.
Prices at the close showed a ¥10 a tonne backwardation between the March and April ShFE copper contracts and a ¥120 a tonne backwardation from April to May.
■ Copper: Three-month copper on the London Metal Exchange was up 0.2% at $5,979 a tonne, as of 0709 GMT, while the most-traded March contract on the Shanghai Futures Exchange closed 0.5% firmer at ¥47,380 ($7,003.28) a tonne
■ Zinc: The metal used to galvanise steel rose as much as 1.8% in Shanghai to ¥20,960 a tonne, its highest since 12 December before closing at ¥20,885, while LME zinc was up 0.1% to $2,500 a tonne after touching a one-week high. “Spec positioning is largely flat now on our estimates on both LME and ShFE" zinc, Marex Spectron said in a note.
■ Aluminium: Aluminium led the rest of the LME complex lower, falling 0.6 percent to $1,849.50 a tonne after the US Senate on Wednesday rejected legislation to keep sanctions on companies linked to Russian oligarch Oleg Deripaska, including aluminium firm Rusal.
■ Alcoa: Top US aluminum producer Alcoa Corp beat Wall Street estimates for quarterly profit on Wednesday, buoyed by strength in its alumina segment, but shares slipped after the company did not provide a closely watched profit measure for the full year.
■ Markets news: Asian stocks nudged higher on Thursday after see-sawing through a subdued session on concerns over China’s economic outlook, while an anti-climactic end to the latest chapter in the Brexit saga offered sterling a moment’s peace.