London copper jumps to highest in over two years as output falls

Copper prices rose on Wednesday as falling Chinese output and a weaker US dollar pushed the London contract to its highest in more than two years.

Three-month copper on the London Metal Exchange jumped as much as 1.8pc to $6,686 a tonne, its highest since June 2018.

The contract was up 0.9pc at $6,628.50 a tonne by 0706 GMT.

The most-traded September copper contract on the Shanghai Futures Exchange closed up 2.2pc at 52,150 yuan ($7,536.34) a tonne.

China's refined copper output in July fell 5.3pc from the previous month to 814,000 tonnes, official data showed.

The US dollar, meanwhile, hovered around a 27-month low on uncertainties about an economic recovery and the US fiscal stimulus package.

A weaker US dollar makes LME metals priced in the greenback cheaper for holders of other currencies.

"The Chinese are back buying copper and we might see more Western buyers later as Chinese production fell in July and at the same time Rio Tinto cut full-year guidance due to smelter delays at Kennecott," said commodities broker Anna Stablum of Marex Spectron.

"Tight supply will hopefully be met by rising demand as Europe and the US will soon come out of the summer doldrums and start consuming again," she said, adding that the dollar was likely to stay under pressure with minutes from the latest US Federal Reserve meeting due later on Wednesday.

FUNDAMENTALS

Rio Tinto cut its refined copper outlook for fiscal 2020 to 135,000 tonnes to 175,000 tonnes from 165,000 tonnes-205,000 tonnes.

Global copper smelting activity tumbled to its lowest level in more than two years in July, data from satellite surveillance of copper plants showed.

LME aluminium advanced 0.5pc to $1,782.50 a tonne while ShFE aluminium climbed 1.5pc to 14,635 yuan a tonne.

LME zinc jumped 1pc to $2,483.50 a tonne while ShFE zinc hit its highest since May 2019 at 20,180 yuan a tonne.