LONDON: Prices for copper and other base metals rose on Friday supported by a weaker dollar and improved outlook for global demand amid easing trade tensions.
Benchmark three-month copper on the London Metal Exchange (LME) added 0.8% to $9,573.50 a metric ton by 1003 GMT.
The growth-dependent metal is up 5% so far this month, supported by the 90-day tariff truce agreed by Washington and Beijing earlier this month to pause their trade war and roll back a majority of the duties levied on each other’s goods since April.
“We are in the situation where the U.S. continues to perform unexpectedly well, trade tensions are easing and recent macro data in China was pretty good,” said Dan Smith, managing director at Commodity Market Analytics. “All of this is good for the risk appetite in base metals for now.”
Providing further support, the dollar headed for its first weekly drop against a range of currencies in five weeks. A weaker U.S. currency makes dollar-priced metals more attractive for buyers using other currencies.
Copper touches three-week low as economic uncertainty lingers
Supporting the importing power in top metals consumer China, the onshore yuan finished the domestic session at its strongest since November.
Copper inventories in warehouses monitored by the Shanghai Futures Exchange fell 9% to 98,671 tons this week, while stocks in the LME-registered warehouses lost 8% to 164,725 amid continuing inflows into the COMEX-owned warehouses. The COMEX inventories are up 3% to 174,607 this week.
In the LME system, the spread between the cash against the three-month copper contract remains at a premium, indicating some tightness for the nearby supply due to the outflows from the stocks.
The premium, known as backwardation, was last at $16 per ton. It is a healthy level, signalling that there is no major squeeze, when compared to $49, its highest in 2-1/2 years, hit in early May, Smith said.
Meanwhile, LME aluminium rose 0.5% to $2,467.50 a ton; zinc and nickel added 0.2% to $2,701.50 and $15,525, respectively; while lead and tin gained 0.9% to $1,987 and $32,650, respectively.
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