LONDON: Copper prices rose on Thursday as the prospect of bigger US economic stimulus lifted Wall Street stocks to record highs, but a firmer dollar and a coronavirus outbreak in China, the biggest metals consumer, threatened the rally.
Benchmark copper on the London Metal Exchange (LME) was up 0.7% at $8,065 a tonne at 1703 GMT, a little below last week's peak of $8,238, the highest since February 2013.
Booming industrial output in China, government and central bank stimulus and buying by speculators betting on price rises drove the metal used in power and construction up 26% last year.
But a rebound in the dollar this month has made metals more expensive for buyers outside the United States, weighing on copper, said ING analyst Wenyu Yao. Traders were also watching for signs of weakening Chinese demand, which would be shown by a faster increase in inventories than usual at this time of year, she said.
Tightening supply could lift copper to $9,500 a tonne on average in the last quarter of this year, analysts at Bank of America said.
China's blue-chip share index slumped, however, as the country reported its biggest jump in coronavirus cases in more than 10 months.
ING's Yao said zinc demand was at most risk because much steel galvanising is done in the area of the outbreak. LME zinc was down 0.9% at $2,747.50 a tonne. A major outbreak could blunt China's economic recovery, which analysts say likely accelerated in the fourth quarter of 2020.
Chinese exports grew more than expected in December. Copper and iron ore imports reached a record high for the full year while aluminium exports fell.
Benchmark nickel was up 3.4% at $18,275, a level not seen since September 2019. The halt of some mining in the Philippines has lifted prices.
China's refined nickel production rose 1.4% last year, researchers Antaike said.
Aluminium was down 0.2% at $2,008.50 a tonne, lead fell 1.1% to $2,028.50 and tin was unchanged at $21,035.
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