LONDON: Copper prices rose on Wednesday as a lower dollar and expectations of further stimulus to boost economic growth in top consumer China boosted sentiment.
Benchmark copper on the London Metal Exchange (LME) was up 0.2% at $8,477 a tonne by 1127 GMT after touching a low of $8,384. Prices of the metal used in power and construction hit a five-week high of $8,515.50 on Tuesday.
“People are expecting to see China do more for growth. Whether that helps metals will depend on what sort of stimulus,” one metals trader said. “But it’s pretty quiet, people are waiting to see what the Fed does and says on interest rates.”
China’s central bank is widely expected to cut the borrowing cost of medium-term policy loans for the first time in 10 months on Thursday, a Reuters poll showed.
It cut its seven-day reverse repo rate and standing lending facility (SLF) rate by 10 basis points on Tuesday, signalling possible easing for longer-term rates to revive demand and restore investor confidence.
The dollar fell after unexpectedly soft U.S. inflation data cemented the view that the Federal Reserve will not raise interest rates later on Wednesday, making dollar-priced metals cheaper for holders of other currencies.
Copper edges higher as China’s rate decision lifts appetite
Other base metals were also supported by the weaker dollar.
Aluminium was up 0.6% at $2,245, lead gained 1.4% to $2,110, tin added 0.4% to $26,180 and nickel rose 0.9% to $22,160 a tonne.
Zinc was up 2.9% at $2,451 a tonne, having hit a 2-1/2 week high of $2,458 after Swedish miner Boliden said it will suspend production at Europe’s largest zinc mine - in Ireland - within the next month owing to “unsustainable financial losses”.
Traders said some concerns over supplies on the LME market are why the discount for cash zinc over the three-month contract flipped into a premium on Tuesday.
The premium was at $2.75 a tonne on Wednesday.
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