Copper set for 4th monthly gain as metals rise on weak dollar, strong China data

BEIJING: London copper was on course for a fourth consecutive monthly rise on Friday and zinc was headed for its best month in almost eight years as industrial metals were buoyed by a sliding dollar and better-than-expected factory activity in top consumer China.

A weaker greenback makes dollar-denominated metals cheaper for holders of other currencies and can support prices.

London Metal Exchange copper stocks, which were at a six-month low of 129,225 tonnes, also helped drive sentiment.

"LME inventories continue to decline, and the (cash to three-month) spread premium has expanded, indicating that overseas demand has continued to improve," brokerage Jinrui Futures wrote in a note.

The LME does not have warehouses registered in mainland China.

FUNDAMENTALS

COPPER: Three-month LME copper rose as much as 1.1pc to $6,500 a tonne, and was at $6,489 as of 0730 GMT.

The most-traded September copper contract on the Shanghai Futures Exchange ended flat at 51,820 yuan ($7,412.81) a tonne.

COPPER: LME copper was on course to add 1.2pc this week and jump 7.9pc in July, having risen every month since April amid a China-led recovery in demand following the coronavirus outbreak.

SHFE STOCKS: Copper inventories in ShFE warehouses rose 1.2pc from the previous week to 159,513 tonnes, the exchange said on Friday.

CHINA: Factory activity expanded in July for a fifth straight month and at a faster pace compared with analysts' expectations.

USD: The dollar slipped to two-year lows and is on track for its biggest monthly decline in 10 years.

OTHER METALS: All LME metals were higher, with zinc rising as much as 2.1pc to $2,334 a tonne, its highest since Jan. 24 and heading for a monthly gain of 13.5pc, the most since September 2012.

ShFE zinc hit its highest since Sept. 16.

Nickel was up 0.8pc and set for its best month since August 2019, while aluminium gained 0.5pc and was set for a 6.8pc jump in July, which would be its biggest monthly rise since April 2018.