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 0.8% to $6,671 a tonne by 1600 GMT, after touching its highest since June 2018 at $6,709.50 a tonne. It gained 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.
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.
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.
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.
Stocks data in warehouses monitored by the Shanghai Futures Exchange shed 2,180 tonnes to 170,086 tonnes, weekly data showed on Friday.
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.
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. Aluminium gained 1% to $1,799 a tonne, zinc rose 1.2% to $2,514, lead slipped 0.5% to $1,972, tin was steady at $17,825 while nickel advanced 1.7% to $15,442.
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