(Adds analyst comment, updates prices, changes dateline from HANOI)
LONDON, June 8 (Reuters) – Copper prices edged higher on Tuesday on optimism about economic recovery, but volumes were low and analysts said there was the potential for more downside.
World stocks hovered close to record highs and data for the euro zone economy was upbeat for the first quarter of the year, contracting less than expected.
Three-month copper on the London Metal Exchange had edged up 0.1% to $9,914 a tonne by 1010 GMT after slipping by 0.6% in the previous session.
“There’s relatively low liquidity, it looks like market participants are waiting for new price drivers they can act on,” said analyst Daniel Briesemann at Commerzbank in Frankfurt.
“A correction is needed and prices are still too high, they have decoupled from fundamentals. We could see much lower prices before they go up again.”
If a downturn was steep, prices could go as low as $8,000 a tonne, he added.
Copper has retreated since touching a record peak of $10,747.50 last month, but is still up 28% year to date, fuelled by speculators betting on a green revolution spurring new demand.
Shanghai copper prices fell, closing 0.4% lower at 71,420 yuan, as fears of monetary policy tightening in the United States and softer demand in top consumer China pressured prices.
The Yangshan copper premium SMM-CUYP-CN was last at $28 a tonne, hovering around its lowest since February 2016 and down 75% compared with May 2020, indicating weakening demand for imported metal in China.
* Indonesia aims for three nickel smelters to be completed and operational this year, a government official said.
* LME cash aluminium was at a $5.24 a tonne discount to the three-month contract CMAL0-3, the smallest discount since May 7, indicating nearby LME supplies are tightening.
* LME aluminium was unchanged at $2,426 a tonne, nickel fell 0.2% to $17,855, zinc advanced 0.4% to $3,012, lead added 0.2% to $2,158 and tin shot up 2.9% to $31,400, the highest in a decade.
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