METALS-London copper hits 3-week high as Beijing steps up economic support - Reuters News
17-Feb-2020 10:53:51 AM
(Adds quotes, details and updates prices)
By Mai Nguyen
Feb 17 (Reuters) - Copper prices rose on Monday, with the London contract hitting a three-week high, as China lowered interest rates on its medium-term loans to support an economy hurt by the coronavirus outbreak.
Three-month copper on the London Metal Exchange (LME) CMCU3 was up as much as 1.2% at $5,828.50 a tonne, its highest since Jan. 27, while the most-traded copper contract on the Shanghai Futures Exchange (ShFE) SCFcv1 edged up 0.4% to 46,070 yuan ($6,604.07) a tonne, as of 0503 GMT.
China's central bank lowered the rate on 200 billion yuan worth of one-year medium-term lending facility (MLF) loans to financial institutions, helping a rally on Chinese stock markets and other Asian bourses. (Full Story) (Full Story)
The bank also said Chinese lenders will tolerate a higher level of bad loans to support firms hit by the epidemic, which has killed over 1,700 people and infected about 70,550 in China. (Full Story) (Full Story)
"The MLF cut is to try to bring the official rate closer to the shadow banking rates, so that less bad loans will surface in the future," a Singapore-based metals trader said.
"Copper getting bid up ... is a testament to a sub-section in the economy used as a conduit to get loans for firms to refinance other liability or just to operate," the trader said.
Trading in other metals was mixed, with LME aluminium CMAL3 dipping 0.1% to $1,720 a tonne, nickel CMNI3 advancing 0.7% to $13,105 a tonne, zinc CMZN3 climbing 0.6% to $2,162 a tonne, while ShFE aluminium SAFcv1 dropped 0.4% to 13,645 yuan a tonne and ShFE nickel SNIcv1 fell 0.8% to 104,720 yuan a tonne.
"Only copper or gold is affected (by the MLF cut) because these are macro assets that fund managers' use in their asset allocation models, while the other small metals are more fundamentals-driven," the trader said.