LONDON: Copper prices climbed on Friday on expected monetary easing in China, though gains were capped by loan data from the world’s leading metals consumer and a firmer dollar.
Benchmark copper on the London Metal Exchange (LME) was up 0.3% at $8,382 a metric ton by 1057 GMT, having retreated from a session high of $8,448.
China’s central bank is expected to ramp up liquidity and cut a key interest rate when it rolls over maturing medium-term policy loans on Monday as authorities try to put the shaky economy on a more solid footing.
Growth in outstanding total social financing (TSF), a broad measure of credit and liquidity in China and viewed as a key gauge of metals demand, fell to 1.94 trillion yuan ($270.72 billion) from 2.45 trillion yuan in November.
“The market rolled back after the Chinese loans data,” one copper trader said, adding that he expected metals market activity to become increasingly subdued ahead of the Chinese Lunar New Year holiday in February.
Copper higher on arbitrage buying, weaker dollar
The U.S. dollar index has risen by about 0.9% this month on stronger than expected data from the United States and reduced likelihood of imminent interest rate cuts by the Federal Reserve.
A stronger U.S. currency makes dollar-priced metals more expensive for holders of other currencies, which could undermine demand.
“Main drivers for the market at the moment include the U.S. macro situation, U.S. interest rates and the dollar,” said BNP Paribas analyst David Wilson. “The market isn’t particularly concerned about copper supply at the moment. Copper isn’t tight, look at the spreads.”
Spreads are the discounts for cash copper against the three-month copper, which this week hit a record high of $108 a ton. The discount was last at $96 a ton.
In other metals, aluminium was down 0.8% at $2,218 a ton, zinc slipped 0.2% to $2,498, lead ceded 0.1% to $2,094, tin was up 0.2% at $24,600 and nickel retreated 0.6% to $16,315.
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