Copper edges higher, finding support in China's rising factory activity

Copper prices experienced a slight increase on Wednesday, bolstered by data indicating a resumption of growth in Chinese factory activity during September. However, trading activity remained lackluster in the lead-up to a week-long holiday, marking the top metals consumer. The benchmark three-month copper price on the London Metal Exchange rose by 0.23% to $14,471 per metric ton, while the most-traded November copper contract on the Shanghai Futures Exchange gained 0.21% to 109,530 yuan ($16,340.20) per ton. The Shanghai contract was set to conclude a shortened week due to the upcoming long holiday.

China's manufacturing purchasing managers' index (PMI) climbed to 50.1 in September, up from 49.8 in August. A private RatingDog survey revealed factory activity expanding at a faster pace, with its PMI reaching a five-month high of 52.1, up from 51.5. Trading activity was restrained before China's National Day holiday, with the Shanghai Futures Exchange (SHFE) closing on Thursday and reopening on October 8.

Domestic copper premiums had weakened from their peak on Tuesday to 1,050 yuan per ton. Nonetheless, the Yangshan copper premium, reflecting Chinese consumers' demand for imported materials, marginally rose to $119 per ton.

The US dollar held strong, anticipating a near 2% monthly increase, driven by higher US yields. This strength made copper-priced metals costlier for holders of alternative currencies. Oil prices also rose, with Brent crude surpassing $100 per barrel, keeping inflation concerns and the possibility of another rate hike by the US Federal Reserve in the spotlight.

Among other LME metals, aluminium saw a 0.09% rise, zinc declined 0.23%, lead remained flat, nickel increased by 0.23%, and tin dropped 0.93%. On the SHFE, aluminium decreased 0.35%, zinc fell 0.26%, lead dropped 0.12%, nickel declined 1.00%, and tin stayed unchanged.