LONDON: Copper edged higher on Tuesday as supply disruptions and interest rate cuts offset worries about high inventories and a sluggish global economy.
Benchmark three-month copper on the London Metal Exchange was up 0.1% at $9,985 a metric ton by 1610 GMT.
“We have to deal with the disruptions that tighten mine supply, but against that we have inventory levels at the major exchanges showing a healthy increase, especially in the U.S.,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“The U.S. rate cuts last week added some positive sentiment, but we have to remember that rates are being cut from a position of weakness, not strength.”
Production remains suspended at Freeport Indonesia’s Grasberg mine, one of the world’s biggest copper mines, following an incident in early September.
Inventories on the U.S. Comex exchange surged earlier this year in anticipation of U.S. tariffs and have continued to climb, reaching 318,285 short tons, up 241% this year.
LME copper has gained 13% so far this year, but has retreated from its 15-month peak of $10,192.50 touched last week.
“The question in the short term is whether the uptrend that we’ve seen since May will hold up. We need to hold above $9,850 in order not to see a downside extension,” Hansen added.
In China, the most-traded copper contract on the Shanghai Futures Exchange closed daytime trading down 0.3% at 79,930 yuan ($11,237.80) per ton.
Some traders closed long positions after SHFE prices closed above the key psychological level of 80,000 yuan per ton on Monday, according to a Singapore-based hedge fund analyst who spoke on condition of anonymity.
Nickel was the best LME performer on Tuesday, rising 1% to $15,360 a ton after top producer Indonesia suspended 190 coal and mineral mining permits.
Among other metals, LME aluminium shed 0.2% to $2,641 a ton and zinc slipped 0.2% to $2,888 after touching a two-week low, while lead added 0.2% to $2,002 and tin gained 0.8% to $34,300.
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