Copper rises on vaccine optimism and faltering dollar

LONDON: Copper rose on Wednesday as optimism over the rollout of coronavirus vaccines bolstered expectations for a rebound in global economic growth and metals demand while weakening the dollar.

Britain on Tuesday began a vaccination campaign, while Johnson & Johnson said it could obtain late-stage trial results of a COVID-19 vaccine it is developing earlier than expected, and Pfizer Inc cleared another regulation hurdle on its jab.

The news has dragged down the dollar, making commodities it is priced in cheaper, and also overpowered fears about rising infections as many nations scramble to quell another round of new cases.

"Despite the ongoing surge in reported virus infection numbers, the price of copper has risen a bit today in part because of the depreciation in the value of the US dollar," said Capital Economics analyst Samuel Burman.

Benchmark copper on the London Metal Exchange had gained 0.5pc to $7,736 per tonne by 1500 GMT, close to the $7,800 touched on Monday, its highest since March 2013.

Prices in recent weeks have also been supported by strength in the Chinese economy, which accounts for more than half of global metals demand.

INVENTORIES: In warehouses registered with the LME, total copper stocks have shed 20pc since mid-October to 149,575 tonnes. Meanwhile, stocks in warehouses monitored by the Shanghai Futures Exchange are near their lowest since 2014.

POSITIONING: The LME copper net speculative long is at 36pc of open interest, a level not seen since October 2017, according to brokers Marex Spectron, a sign of optimism from funds.

CHILE MINE: One of the unions in contract negotiations with Antofagasta Minerals at its Centinela mine has reached an agreement with the Chilean miner, while another was still in talks, union leaders said on Wednesday.

STIMULUS: Investors are also eyeing a $916 billion coronavirus relief package proposed by the Trump administration.

OTHER PRICES: LME aluminium rose 2.3pc to $2,035.50 per tonne and zinc was 1.8pc higher at $2,850.50 after hitting its highest since April 2019.

Nickel climbed 2.6pc to $16,825, the strongest since November 2019, lead gained 0.4pc to $2,108.50, while tin gained 1.2pc to $19,400 after touching its highest since June 2019.