Copper steadies as weaker dollar, low inventories lend support

Copper shrugged off an early dip to trade higher on Friday as a weaker dollar and lower inventories countered a selloff stemming from equity markets, but remained on track for a weekly decline.

Benchmark three-month copper on the London Metal Exchange was up 0.3% at $13,308 a metric ton in official open outcry activity. It earlier fell as much as 1.4% to $13,083.

The metal, considered a bellwether for the health of the global economy, was on course to end the week down 2.1%, which would mark its biggest weekly decline since the week ended May 1.

Tech-driven losses on Wall Street had initially dragged copper down, but the base metals complex was supported by a weaker dollar, which makes dollar-denominated commodities cheaper for investors using other currencies.

Sucden Financial senior broker Robert Montefusco said the selloff in copper seemed a little overdone but the market was still lacking real impetus. “Even with inventories down, we’re not really pushing forward. We need something fairly fundamental to push it up,” he said.

Shanghai Futures Exchange copper stocks fell 5.7% from last week to 135,732 tons, the lowest since December, while LME copper stocks trickled down to 336,475 tons, the lowest since March 18.

The cash LME contract was trading at a $35.50 per ton discount to the three-month forward, narrowing from a $42.40 discount on Thursday.

Aluminium climbed 0.3% to $3,174 a ton after a cargo ship was hit in the Strait of Hormuz on Thursday.

The metal touched $3,110 on Wednesday, the lowest since February 25 before the U.S.-Iran conflict began. It was heading for a 6.4% weekly drop, which would be its worst week since March.

“With energy prices coming down, the costs for producing aluminium should be coming down,” Montefusco said, adding that there could be buying around the $3,000-$3,100 mark.

Zinc edged up 0.3% to $3,446, lead lost 0.2% to $1,908, nickel shed 0.6% to $16,720 and tin added 0.1% to $50,450.