(Updates with official prices)
May 25 (Reuters) – Copper prices rose on Tuesday amid expectations of robust demand, tight supply and a weaker dollar, but concerns over major Chinese consumers’ crackdown on prices of industrial materials dampened the sentiment.
The London Metal Exchange benchmark copper traded up 0.1% to $ 9,961 per tonne in official rings.
Prices of the metal widely used in the energy and construction industries have fallen 7% since reaching a record high of $ 10,747.50 per tonne earlier this month.
Much of the decline came after China increased its margins for futures trading and transaction fees and introduced penalties for violations of futures contracts ranging from excessive speculation to spreading false information.
“China’s looming political goal is to curb the pace of price hikes and give downstream sectors some time, but not to kill the rally completely,” Citi analyst Max Layton said.
“But since most of these measures do not change the underlying fundamentals of supply and demand, which are improving, we expect another round of steady increases in commodity prices once the current instinctive price corrections will have run their course. “
PLAN: China will tighten commodity price controls in its 14th five-year plan from 2021 to 2025, providing for dealing with abnormal fluctuations in commodity prices, including iron ore, copper and corn.
DOLLAR: The dollar hit a 4-1 / 2-month low against a basket of currencies, as weaker US data and insistence by Federal Reserve officials that policy would remain alleviated by fears of the investors regarding inflation forcing interest rates to rise.
A weaker US currency makes commodities cheaper for other holders of other currencies, which could stimulate demand.
TECHNIQUES: The upside resistance in copper prices is at the 21-day moving average at $ 10,100, while a trendline and 50-day moving average provide strong support at $ 9,400.
WARRANTS: Concerns over copper supplies on the LME market emerged after data from the exchange showed that a company held large amounts of warrants – title deed.
OTHER METALS: Aluminum fell 0.6% to $ 2,372.5 per tonne, zinc rose 0.3% to $ 2,958, lead gained 0.2% to $ 2,145.5, the Pewter was down 0.4% to $ 29,335 and nickel climbed 0.3% to $ 17,166. (Reporting by Pratima Desai; editing by Barbara Lewis and Louise Heavens)