July 28 (Reuters) – Prices of copper, which is widely viewed as a gauge of global economic health, continued to hover near their multi-week highs scaled in the previous session, as investors bet on a strong outlook for the metal in the second half of this year.
The metal was supported on Wednesday by falling inventories in ShFE CU-STX-SGH, which hit their lowest since Feb. 10 at 96,087 tonnes last week, exchange data showed.
However, gains in copper were short-lived as a strong dollar made greenback-priced metals more expensive and less appealing to holders of other currencies, ahead of a policy verdict by the U.S. Federal Reserve later in the day.
Three-month copper on the London Metal Exchange gained for most of the Asian trading hours, before reversing course to edge down 0.2% to $9,740 a tonne, as of 0729 GMT.
The contract was still holding near its highest level in six weeks.
The most-traded September copper contract on the Shanghai Futures Exchange dipped 0.2% to 71,850 yuan ($11,051.47) a tonne, but still hovered near an eight-week high touched in the previous session.
Yangshan copper premium SMM-CUYP-CN was last traded at $45 a tonne, hovering near its highest level since end-April, indicating higher demand for importing the metal into top consumer China.
“Falling exchange inventories and rising premium are suggesting strong physical demand. Copper will continue to benefit from structural theme of electric vehicles adoption and green energy,” ANZ analyst Soni Kumari said.
“A more loose monetary policy in the second half of this year against earlier expectations of a tighter monetary policy in H2 would be supportive for copper and other metals. Therefore, we see copper price rally to sustain towards end of this year," she added.
* The difference between the LME cash aluminium and the three-month contract CMAL0-3 flipped to a premium of $6.50 a tonne, having stayed in a discount since June 18, indicating tightening nearby supplies as stockpiles fell in both LME and ShFE warehouses. MALSTX-TOTALAL-STX-SGH
* LME aluminium fell 0.3% to $2,481.50 a tonne, nickel rose 0.9% to $19,535 a tonne, while zinc declined 0.8% to $2,960 a tonne.
* ShFE nickel rose as much as 1.3% to 148,550 yuan a tonne, its highest since Feb. 22, while aluminium fell 1.3% to 19,375 yuan a tonne, and lead shed 1.5% to 15,870 yuan a tonne.