LONDON: Copper prices dipped on Friday, pressured by a firmer dollar, but were on track to achieve a modest gain this year on healthy demand from China and hopes for US interest rate cuts.
Three-month copper on the London Metal Exchange (LME) shed 0.6% to $8,575 per metric ton in official open-outcry trading. LME copper has gained 2.5% this year, partly reversing a decline of 13.9% in 2022.
Investors were divided on the outlook for 2024, with bulls highlighting the prospect for further stimulus in top metals consumer China, demand from the green transition, plus the hope of rate cuts as inflation subsides.
Others are more cautious due to weak economic growth which may cause recessions in some nations. “It would seem the global economy is due to slow down even further in the first half of 2024 which means the bullish story for metals that some are putting out may have to wait a while,” said Malcolm Freeman, CEO at Kingdom Futures.
In China, however, copper demand climbed 3.2% this year after the country dropped its zero-COVID policy, according to analysts at brokerage China Futures.
The annual growth will moderate to 2.8% in 2024, as the housing sector remains sluggish but partly offset by increasing investment in power grid, strong solar and wind power sectors, they added. Copper is widely used in power, construction and transportation sectors. The market was also underpinned by a tighter supply outlook for copper concentrate amid mine closures and disruptions, highlighted by the move by China’s top copper smelters on Thursday to lower their first-quarter guidance for copper charges.
Weighing on metals was a firmer dollar index, making commodities priced in the US currency more expensive for buyers using other currencies.
LME nickel fell 1.1% in official activity to $16,550 a ton after LME inventories hit fresh 18-month highs, having surged by 38% this month, highlighting excess supply. LME aluminium edged up 0.1% to $2,381 a ton and zinc added 0.5% to $2,653 while lead dropped 1% to $2,066 and tin shed 0.9% to $25,450.
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