The following is taken from a report by Scotia Capital.
Base metals are mixed but with a clear downside bias this morning with many hitting multi-week and multi-month lows - nickel hit its cheapest in six years - because of concerns that Greece is courting disaster.
The country's future in the eurozone is hanging in the balance - Greece pulled out of emergency meetings with creditors over the weekend and called for a referendum on Sunday to vote on the proposed bailout terms.
The country has shuttered its banks for at least a week and imposed capital controls after the European Central Bank froze emergency liquidity assistance to Greek banks at current levels. Greece must make a 1.6-billion-euro payment to the IMF on Tuesday, the same day that its current bailout agreement is set to expire.
But copper shrugged off the Greek uncertainty. Copper was last at $5,790 per tonne, up $20 increase on Friday's close on very high volume (more than 2x normal levels).
LME inventories fell a net 2,650 tonnes to 307,650 tonnes and cancelled warrants rose 975 tonnes to 61,225 tonnes. The forward spreads are tight - the benchmark cash/threes was last at a contango of $12 while cash/July was just $1.50; the presence of a dominant holder of warrants could result in more tightness.
Copper took support from the Chinese central bank lowering interest rates by 25 basis points over the weekend for the fourth time in the last seven months. In conjunction with the economic stimulus measures already implemented, this should lead to higher demand for metals in the medium term and shore up their prices. Additional easing measures are likely to be initiated in the second half of the year.