Demand optimism boosts copper, end to US stimulus talks weighs

LONDON: Copper prices rose on Wednesday as expectations of improving economic growth and stronger demand for industrial metals boosted sentiment, but a higher dollar and an end to talks for a US stimulus package capped gains.

Benchmark copper on the London Metal Exchange was up 0.3pc at $6,548 a tonne at 1015 GMT.

Prices of the metal used widely in the power and construction industries are up about 50pc since the middle of March when economic activity stalled due to COVID-19 lockdowns.

"We are optimistic the global economy will recover over the coming year, that should benefit metals, which are in a better place than energy," said Danske Bank analyst Jens Pederson.

"Asia and China are doing well, which is important for metals. The direction is up, but it won't be a straight line."

DEMAND: China's factory activity extended solid growth in September as the nation's crucial exports engine revved up on improving overseas demand. China accounts for about half of global demand for industrial metals.

UNITED STATES: President Donald Trump ended negotiations with congressional Democrats over proposals to spend at least $1.6 trillion in additional coronavirus relief funds.

DOLLAR: The dollar held gains against most currencies on Wednesday.

A rising US currency makes dollar-priced metals more expensive for holders of other currencies, which could subdue demand and prices.

ALUMINIUM: Stocks of aluminium in LME approved warehouses have fallen nearly 15pc since the middle of July to 1.423 million tonnes.

Cancelled warrants - metal earmarked for delivery - at 21pc suggest more aluminium is due to leave LME warehouses over the coming days.

Shrinking supplies on the LME market are behind the narrowing discount - currently down to about $25 from nearly $40 two weeks ago - for the cash over the three-month aluminium contract. The three-month contract was up 0.3pc at $1,771.

OTHER METALS: Zinc rose 0.2pc to $2,369, lead climbed 0.7pc to $1,792, tin slipped 0.2pc to $18,145 and nickel added 1.1pc to reach $14,675 a tonne.