LONDON: Copper prices edged higher on Thursday as the dollar slid and investors looked forward to more central bank stimulus, with a wave of fresh lockdowns threatening economic growth. The price action tracked Wednesday's pattern, with copper drifting lower in early trading before erasing losses and moving higher later.
Three-month copper on the London Metal Exchange (LME) was up 0.1% at $6,845.50 a tonne by 1652 GMT, after touching an intraday low of $6,780. "I'm still cautiously optimistic for copper. I think there's got to be more support for fiscal packages, and the Fed will also have to do more," independent consultant Robin Bhar said.
"We've seen the Bank of England putting in more QE (quantitative easing) today and around the world we're going to be seeing more support."
Copper was also boosted by a blistering rally in share markets, which lifted sentiment for risky assets as Democrat Joe Biden inched closer to winning the White House. Curbing gains, however, were election legal challenges creating uncertainty and the potential of a divided US Congress delaying planned spending by Biden on a metals-intensive "green revolution", Bhar added.
Copper has rebounded by more than 50% since its 2020 trough in March, helped by strong Chinese demand, supply disruptions, stimulus hopes and a weaker dollar. Aluminium and zinc producers took advantage of spikes in prices to hedge, selling their output in advance, said Alastair Munro at broker Marex Spectron.
Helping to support metals was a weaker dollar index, which was on course for its biggest three-day drop since March. A weaker dollar makes metals priced in the US currency cheaper for buyers using other currencies. The surplus in the global nickel market this year is set to narrow in 2021, research house Antaike said, as a rise in consumption of the metal used in stainless steel and batteries for electric vehicles outpaced production growth.
Aluminium fell 0.7% to $1,894.50 a tonne after touching a 19-month high on Wednesday, while lead slipped 0.2% to $1,838. The others were firmer. Zinc rose 0.6% to $2,610, its highest since May 2019, nickel climbed 1.5% to $15,570 and tin added 0.1% to $18,205.
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