LONDON: Copper prices rose to their highest in more than a week on Monday as lower oil prices alleviated anxiety about economic growth and demand while the market also focused on dwindling inventories. Benchmark copper on the London Metal Exchange was up 0.6 percent at USD13,868 a metric ton at 1605 GMT, after touching USD13,900 a ton for its highest since July 22.
Traders said the drop in oil prices after US President Donald Trump called off a fresh attack on Iran as he sought a deal to curb Tehran’s nuclear ambitions has also eased concern about price pressures and boosted sentiment.
“The markets continue to be headline-driven as we start the week, with energy markets serving as the primary focal point,” Britannia Global Markets said in a note.
“The underlying fundamental picture (for copper) looks to remain supportive. Inventories in both China and London Metal Exchange warehouses are in a state of depletion.”
Copper stocks in LME-registered warehouses have fallen nearly 40 percent since the end of May to their lowest since February at 244,025 tons.
Producers and traders have been shipping copper to the United States since February last year, when President Donald Trump threatened import tariffs, creating a premium for US copper over LME prices. Elsewhere, zinc slipped 0.1 percent to USD3,641 a ton after climbing to a four-year high of USD3,703.50 on worries over supplies on the LME.
This was due to three large holdings of cash contracts and warrants that also created large premiums for nearby zinc contracts against longer-dated forwards. This was reinforced by a large short maturing on zinc futures this month.
The premium, or backwardation, for cash zinc over the three-month forward is near levels last seen in December.
LME zinc stocks have dropped to 99,285 tons, down 25 percent since the middle of June, with cancelled warrants — metal earmarked for delivery — at 26 percent also adding to the unease. In other metals, aluminium gained 1.3 percent to USD3,225 a ton, lead retreated 0.6 percent to USD1,867, tin added 0.5 percent to USD55,550 and nickel fell 1.2 percent to USD17,045.
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