By Eric Onstad
LONDON, Feb 28 (Reuters) – Copper prices extended their rally on Tuesday as speculators adjusted positions on hopes of a pickup in demand in China, the metals’ biggest consumer.
* Three-month copper on the London Metal Exchange rose 0.6% to $8,856 a tonne at 11:30 GMT, after gaining 1% on Monday. However, the contract was down 4.5% per month, its first decline since October.
* The most-traded copper contract in April on the Shanghai Futures Exchange rose 0.5% to 69,050 yuan ($9,950.57) a tonne, but also fell during the month.
* Copper on the LME rebounded from an important level for investors watching for technical signals, said Ole Hansen, head of commodities strategy at Saxo Bank in Copenhagen.
* The gains were due to profit taking by speculators who had gone short, as well as new long positions by investors taking advantage of a cheaper level to enter the market, he added.
* “I’m relatively optimistic about the price action, especially since the rebound has been at a technically significant level,” Hansen said. “It indicates that the weakness we have seen is more of a correction within a market that wants to go higher.”
* Copper on the LME has fallen 7% since hitting a seven-month high in January at $9,550.50 a tonne, after rising largely on hopes that the easing of tight controls tied to COVID-19 in China would drive demand.
* Demand for copper in China remained weak in February, weighing on prices, while a stronger dollar also made the US-dollar-denominated metal more expensive for holders of other currencies.
* Analysts expect China’s economy to rebound strongly from March as the government is likely to roll out more stimulus in the National People’s Congress.
* In other metals, LME aluminum fell 1% to $2,339.50 a tonne; zinc was down 0.3% at $2,979; Nickel fell 1.6% to $25,095; Lead was down 1.5% at $2,080.50; and tin fell 0.8% to $25,265.
(1 dollar = 6.9393 yuan)
(Additional reporting by Mai Nguyen in Hanoi; Spanish editing by Carlos Serrano and Manuel Farías)