Copper tiptoes higher on weaker dollar, tight Chinese supplies
LONDON: Copper prices crept higher on Friday, boosted by a weaker dollar and shortages in China, but gains were modest as investors remained wary about the potential for more rate hikes that could dampen metals demand. Benchmark three-month copper on the London Metal Exchange rose 0.2% to $14,645 a metric ton in official open-outcry trading, a 0.8% increase from last week’s close. Financial…
Copper prices rose slightly on Friday, propelled by a weaker dollar and limited supplies in China, though gains were modest as investors remained cautious about potential rate hikes that could dampen metals demand. The benchmark three-month copper price on the London Metal Exchange increased by 0.2% to $14,645 per metric ton in official open-outcry trading, marking a 0.8% rise from the previous week's close.
Financial markets, including industrial metals, have experienced volatility due to bond markets struggling with inflationary concerns stemming from higher energy prices. Oil prices declined on Friday, while the dollar weakened after reaching its strongest level in nearly two months, making commodities priced in US dollars relatively cheaper for international buyers.
Commodity strategist Nitesh Shah from WisdomTree noted that some of the previous day's pressures are easing, but investors are becoming more risk-averse amid the current environment. He believes that the market might have overestimated expectations for US rate hikes, potentially leading to increased demand for base metals instead.
LME copper prices climbed 10% over the past three months, driven by persistent speculation about potential US tariffs, creating supply shortages in other regions. China's visible inventories have significantly decreased, and smelters have announced reduced production schedules for maintenance, contributing to the tight market conditions in China.
David Wilson, head of metals strategy at BNP Paribas, pointed out that the Chinese market is notably tight. LME zinc prices reached their strongest level in two weeks at $3,989.50 per ton but later fell to $3,950, a 0.1% loss. The premium of LME cash zinc to the three-month contract surged to $106 a ton on Thursday, up from $65.35 a day earlier, indicating tightening physical availability.
Other LME metals also exhibited relatively modest gains, with aluminum rising 0.5% to $3,265 per ton, tin increasing 0.3% to $54,150, while lead dipped 0.3% to $1,928 and nickel declined 1.8% to $16,210.
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