Copper rises on supply concerns, lower U.S. dollar

LONDON: Copper prices climbed on Thursday as concern about available supplies and a lower dollar reinforced bullish sentiment, but rising inventories capped gains as the market awaited trade data from top consumer China.

Benchmark copper on the London Metal Exchange (LME) was up 1pc at $9,008 a tonne at 1550 GMT.

Prices of the metal used widely in the power and construction industries are down 6pc since hitting 9-1/2-year highs of $9,617 last month.

"Copper prices have settled around $9,000, not $8,000, which tells you the market is fairly tight," said Guy Wolf, global head of analytics at Marex.

"The outlook is very uncertain, the key thing is will vaccines stop the spread of the coronavirus? Once people believe the vaccine stops you infecting other people, things will start moving."

SUPPLY: Treatment charges - to turn copper concentrate into metal - have crashed because of disruptions to mine supply globally. Smelters have had to accept lower treatment charges to ensure they have enough feedstock to keep operations going. .

DOLLAR: A lower U.S. currency makes dollar-denominated metals cheaper for holders of other currencies, which could potentially boost demand.

INVENTORIES: Copper stocks in LME-registered warehouses have more than doubled since early March.

However, cancelled warrants - metal earmarked for delivery - at 36pc and large holdings of copper warrants are fuelling worry about availability on the LME market and have created a premium for cash copper over the three-month contract.

TRADE: Data on Chinese imports and exports for March are due on Friday.

INFRASTRUCTURE: U.S. President Joe Biden is expected to meet lawmakers in coming weeks to discuss his proposed infrastructure plan, which is expected to boost demand for industrial metals.

ED&F Man Capital Markets analyst Edward Meir said any package is unlikely to move the needle significantly.

"Even if a package is agreed, the process of building infrastructure is so drawn out that the impact will be diluted."

OTHER METALS: Aluminium rose 1.1pc to $2,285 a tonne, zinc was up 0.9pc to $2,859, lead slipped 0.3pc to $1,987, tin was little changed at $25,795 and nickel gained 1pc to $16,805.