By Glenys Sim
June 18 (Bloomberg) -- Copper gained for the first time in five days in Asia, halting the longest slide in six months, as the dollar weakened, boosting demand for commodities as alternative investments.
The dollar was little changed against a basket of six major currencies after falling 1.1 percent in the past two days, making the metal cheaper for holders of other currencies.
“The gains are dollar driven, however the mood of the market is still cautious, which is likely to cap any rally,” Wang Zhouyi, an analyst at China International Futures (Shanghai) Co., said today.
Three-month delivery copper on the London Metal Exchange rose as much as 0.8 percent to $4,997 a metric ton, and traded at $4,970 a ton at 9:44 a.m. Singapore time. The metal declined for the past four days, the longest retreat since a five-day fall up to Dec. 18.
September-delivery copper on the Shanghai Futures Exchange fell as much as 0.6 percent to 39,140 yuan ($5,727) a ton, before trading at 39,200 yuan. Copper for September delivery in New York gained 0.3 percent to $2.2765 a pound.
The negative arbitrage between the London and Shanghai markets will put a lid on prices as well, according to Wang. Some investors in China buy the metal in London and sell in Shanghai to profit from the difference between the two markets.
Futures in China are trading at a discount to those on the London Metal Exchange, with prices yesterday over 700 yuan ($102) a ton lower than London, after accounting for China’s 17 percent value-added tax.
Among other LME-traded metals, aluminum rose 0.8 percent to $1,635 a ton, and zinc gained 1.1 percent to $1,568.25 a ton. Lead, nickel and tin hadn’t traded as of 9:50 a.m. in Singapore.
To contact the reporter on this story: Glenys Sim in Singapore at gsim4@bloomberg.net
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