Copper gained after commodities group Glencore announced plans to shut down loss-making mines to help to reduce a glut of supply that has weighed on prices.
Bearish investors scrambled to close out positions by buying futures, but analysts said it was uncertain whether Glencore’s move to close some African copper operations for 18 months would create a trend.
“It’s probably not enough to see prices go up (substantially), but it certainly supports the market,” said Grant Sporre, head of metals research at Deutsche Bank in London. “It also ensures that copper is probably not going to fall in the same way that iron ore and met (metallurgical) coal have done.”
Sporre had forecast a global copper supply/demand surplus of 350,000 tonnes for next year and said that Glencore’s move would bring the market close to balance, given that it is expected to remove 300,000 tonnes in 2016.
Glencore’s mine closures, which were due to remove 400,000 tonnes of copper cathode from the market over 18 months, were part of a wider initiative that included the suspension of dividends, asset sales and a $US2.5 billion share issue as it seeks to cut debt.
Three-month copper on the London Metal Exchange failed to trade in closing open outcry activity amid thin volumes, with US markets closed for the Labor Day holiday.
Copper was last bid at $US5148 a tonne, up 0.6 per cent from Friday’s close.
There have been signs of a pick-up in copper demand from mainland China, UBS analyst Dan Morgan said.
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