Copper hits fresh 2-year high on weak dollar, falling stocks

LONDON: Copper hit its highest level since mid-2018 on Friday as the dollar extended losses and visible inventories pointed to a steady recovery in demand for the metal.

Three-month copper on the London Metal Exchange climbed 1.2% to $6,702 a tonne in official trading, after touching its highest since June 2018 at $6,709.50 a tonne. It was higher for a fifth consecutive session.

"Inventories of copper are drawing down at a decent pace and the fundamentals are looking quite good," said BMO Capital Markets head of research Colin Hamilton, citing lower visible stocks in exchange warehouses.

There were also signs of a high level of systematic buying and high frequency trading, said Alastair Munro at broker Marex Spectron.

MONETARY POLICY: The Fed introduced a new monetary policy on Thursday which is likely to keep interest rates low and pressure the dollar and make metals more attractive to holders of other currencies.

FACTORY POLL: China's factory activity likely expanded at a slightly faster pace in August, fuelled by rising infrastructure spending and improving global demand, a Reuters poll showed, as the Chinese economy continues to recover from the coronavirus crisis.

INVENTORIES: Total copper stocks in LME-registered warehouses hit their lowest since December 2005 at 89,350 tonnes. Supply concerns have helped maintain a premium for cash copper over the three-month contract of about $23 a tonne.

CHINA PREMIUM: Meanwhile, the Chinese copper premium for physical metal at Yangshan fell to its lowest since April $68.50 per tonne, pointing to sagging demand on the spot market.

RESTARTS: Workers at Indonesia's Grasberg gold and copper mine on Friday ended a protest demanding an easing of a coronavirus lockdown at the mine operated by a local unit of Freeport-McMoran Inc.

Activities at Indonesia's Weda Bay smelter complex, one of the country's main nickel processing hubs, resumed on Thursday after floods halted operations earlier this week.

OTHER PRICES: Aluminium gained 0.9% to $1,797.50 a tonne, zinc rose 2.8% to $2,554.50, lead added 1% to $2,003, tin shed 0.2% to $17,774 while nickel advanced 1.7% to $15,442.