Copper hits three-week high on China tightness, supply concerns on Iran attacks

LONDON: Copper prices extended gains on Tuesday to touch their strongest in three weeks on signs of firmer demand and shortages in China, as well as supply worries after more attacks in the Middle East.

Benchmark three-month copper on the London Metal Exchange climbed 0.4% to $13,590 a metric ton in official open-outcry trading after touching $13,638, its highest since June 23.

“Copper is finding support from a combination of strong Chinese export data and tightening physical market conditions,” said Ewa Manthey, commodities strategist at ING.

Data showed that exports in top metals consumer China surged in June in their best performance in four months.

The most-traded copper contract on the Shanghai Futures Exchange rose 1.1% to 104,390 yuan per ton.

“Rising Chinese premiums and falling exchange inventories suggest spot availability is becoming more constrained,” Manthey added.

The premium paid over SHFE prices to buy copper in the spot market rose to 215 yuan per ton, up from zero at the end of June and its highest since late February.

A weaker dollar index also supported metals markets, making commodities priced in the U.S. currency cheaper for buyers using other currencies.

Escalation in the Iran conflict also revived concern about supplies of sulphur from the Gulf, a key risk for copper and nickel supply chains. Sulphuric acid is used in copper leaching.

The U.S. hit Iran with five hours of strikes while a U.S. air base in Jordan was targeted by Iranian missiles, sending oil prices to their highest in four weeks.

LME aluminium dipped 0.1% in official activity to $3,167 a ton and nickel slipped 0.1% to $16,750, while zinc rose 0.5% to $3,585 and tin jumped 3% to $54,195.

Lead fell 0.7% to $1,855 a ton after LME inventories jumped by 80,700 tons or 28% to their highest in 14 years after inflows at Singapore warehouses.