Market and product

London copper edged up in light trade on Wednesday as the dollar weakened, but expectations of slowing demand in summer capped demand.

“There’s still a bit of cloudiness around underlying Chinese demand, which is creating a bit of uncertainty in the market, with the strong seasonal period coming to an end,” said analyst Daniel Hynes at ANZ in Sydney.

Hynes expects third quarter demand to be stronger than the particularly weak first quarter. “I still expect incremental improvement … But certainly year-on-year gains we would normally have expected are probably unlikely.”

Three-month copper on the London Metal Exchange had edged up 0.2 percent to $ 5,977 a tonne by 0155 GMT, after a slightly firmer close in the previous session. It found support at the 100-day moving average of $ 5,935 a tonne, recovering from Friday’s six-week lows of $ 5,885 with less than 300 lots turnover in the first two hours of trade.

The most-traded August copper contract on the Shanghai Futures Exchange climbed 0.3 percent to 43,310 yuan ($ 6,978) a tonne. Investors slashed bets on higher copper prices, the latest LME data showed, with the net long money manager position slumping by nearly 50 percent in the past three weeks, according to BNP Paribas.

The allure of copper tends to wane going into summer, a slower season for demand. China’s copper imports fell 16.3 percent in May from the previous month, hitting a three-month low as a slowdown in the economy trimmed demand and global prices rose.

In other metals, China’s exports of semi-manufactured aluminium were set to ease due to a sharp correction in global premiums which would tighten the market outside China and eventually support LME prices, Standard Chartered said in a note.

“Falling premiums during May weighed on export economics for semis and we believe this will constrain export flows in mid-2015,” it said.

“If China’s semis exports do moderate over the next few months, this will have a relative tightening effect on the ex-China balance, particularly if less semis remelt aluminium is exported as part of that trend … (it) would also point to LME prices outperforming SHFE.”

Elsewhere in the region, Japan’s core machinery orders unexpectedly rose in April at the fastest pace in four months, in a sign companies are turning more optimistic about business investment as domestic demand strengthens.

Meanwhile, US job openings surged to a record high in April and small business confidence perked up in May, suggesting the economy was regaining speed after stumbling at the start of the year. That may support a dollar revival.