London - Copper edged up on Wednesday on steady demand from top consumer China, and as the dollar was pressured by bets that the US Federal Reserve will announce only a modest tapering of monetary stimulus later this session.
Traders expect the Federal Open Market Committee (FOMC) to be cautious with cuts to its $85 billion monthly asset buying when it announces its plans at 20:00 SA time, while also seeking to reassure investors that an actual rise in interest rates is still distant.
Reuters polls suggest a $10 billion cut, but recent data has moved some in the market to expect less.
The uncertainty kept the dollar near a four-week trough against a currency basket, and made dollar-priced metals cheaper for non-US investors.
Benchmark three-month copper on the London Metal Exchange rose 0.57 percent to $7,115.25 a tonne by 11:14 SA time, recovering from a 1-month low of $7,024 a tonne hit on Friday.
Copper is up around 7 percent from three-year lows hit in late June, underpinned by improving sentiment on global growth, especially in China, which accounts for 40 percent of global copper consumption.
But copper has failed to make headway above $7,420 a tonne, the top-end of a recent band hit in mid-August.
“Base metals have been underperforming massively compared to other risk assets so it's not surprising to see them stabilise. Recent (Chinese) data for imports was again very robust and I wouldn't be surprised to see dealers coming to the market to buy copper,” said Commerzbank analyst Eugen Weinberg.
Shanghai bonded premiums were quoted unchanged on the day at $170-200 a tonne, according to China-based price provider Shmet, down from 4-year peaks around $210 a tonne in late June. (http://www.shmet.com/)
As prices have slipped towards the bottom end of the recent range, China-based bargain hunters are stepping up their purchases of physical copper.
Domestic market prices jumped to around 400 yuan per tonne over the front month ShFE futures contract on Tuesday, the highest in nearly two months.
On the downside for copper, however, markets expect supplies will continue to improve going forward.
Stronger mine output of concentrates is encouraging Chinese copper smelters to look for up to a 50 percent increase in annual term treatment and refining charges (TC/RCs) for 2014.
In other metals traded, aluminium edged up 0.35 percent at $1,783 a tonne. Prices are down nearly 15 percent for the year as a whole as the market remains encumbered by a massive structural stock overhang.
Russia's United Company Rusal 0486.HK expects more aluminium smelter closures in western Russia due to the falling price of the metal, Rusal First Deputy Chief Executive Vladislav Soloviev said on Wednesday.
Also, the world's top aluminium producers and consumers are at loggerheads over the thorny issue of what price, or premium, should be paid to secure metal deliveries, and will conclude fewer fixed term supply deals this year, industry sources said.
Nickel edged up 0.18 percent to $13,855 a tonne, though the metal is down nearly 19 percent for the year, making it the worst performing asset in the base metals complex.
Daily LME data showed stocks rose 2,136 tonnes to 218,448 tonnes, a new record high. - Reuters