Shanghai - Copper prices rebounded strongly on Monday, up 2% in London and 3.5% in Shanghai, after global policymakers agreed on a $1 trillion emergency fund for Greece, easing fears on Athen's fiscal crisis.
The European Union finance ministers, central bankers and the International Monetary Fund unleashed the emergency package in marathon talks at the weekend, to stablise financial markets and prevent the Greek debt crisis from destroying the euro currency.
LME nickel rose as much as nearly 4% to $23 450 a tonne, and aluminium rose nearly 3% to $2 140.
"If Greece's problem does not spread to other countries, we will see copper prices rebound. But Europe's problems are not going to be solved very soon. We can expect to see it play out in the financial markets in the next two to three months," said a Shanghai-based trader.
Panic prevailed in the market last week, sending London copper prices down 7%, aluminium down 8% and the complex leader nickel down 14%.
Traders and analysts expected the market to calm down this week, as the worries eased.
Shanghai's benchmark third-month copper futures contract rose by 3.5% to 56 410 yuan a tonne.
The most-active contract for August delivery rose nearly 4% to 56 570 yuan a tonne.
Xstrata suspends copper exploration in Australia
Three-month copper on the London Metal Exchange hit a one-week high of $7 092, before easing to $7 085, up 2% from the previous close.
The arbitrage window between Shanghai and LME closed, after opening up for a brief period last week as LME prices fell sharply.
"The price rebound won't be very strong, because Shanghai futures prices are being dragged down by a sluggish spot market. If the LME recovers quickly, the arbitrage window closes and spot prices revert to a discount again," said a second Shanghai-based trader.
"LME copper will probably be consolidating this week."
A rebound in LME copper prices may have ended after touching $7 075 per tonne on Monday, as the wave pattern indicates there is a completion of a minor wave "4" or wave "3-2" and copper is expected to resume dropping, according to Reuters market analyst Wang Tao.
Some traders said the metals market will continue to be on policy watch to assess downstream demand for metals such as those used in air conditioning units.
"Spot supply is abundant, but the downstream consumption is already feeling pressure from China's policy moves - tighter liquidity, cooling property market, etc. And the termination of a subsidy on energy-efficient air-conditioners from June may affect sales of air-conditioners in the summer," said the first Shanghai-based trader.
Global miner Xstrata suspended copper exploration in Australia as the backlash against the government's "super profits" tax intensified, but said the decision will not affect copper production in Australia.
- Reuters