LONDON: Copper prices climbed to their highest in more than two weeks on Monday, buoyed by declining inventories and a weaker dollar, though gains were capped by the damage to demand from coronavirus lockdowns in top consumer China.
Benchmark copper on the London Metal Exchange (LME) was up 0.4% at $9,464 a tonne by 1004 GMT. Prices of the metal used in the power and construction industries earlier touched $9,532 for its highest since May 5.
“Key traumas have been factored into metals markets, which are settling down,” said Liberum analyst Tom Price, referring the surge in demand after the lifting of lockdowns, the war in Ukraine and increases to U.S. interest rates.
Even if China eases lockdown controls and tries to stimulate growth, the strongest period for metals demand - typically the second quarter - has already passed, Price said.
“Stimulus in China now is really a story for 2023.”
Copper: Inventories of copper in LME-registered warehouses fell by 3,525 tonnes to 171,075 tonnes.
Cancelled warrants - metal earmarked for delivery - are at 46% of total inventories, suggesting that more metal is due to leave LME warehouses over the coming days.
With one firm holding large amounts of warrants, this has fuelled concern about availability on the LME market and created a premium for the cash contract over three-month copper.
Dollar: A weaker U.S. currency makes dollar-priced commodities cheaper for holders of other currencies, which could boost demand.
Aluminium: Stocks of aluminium in the LME system are at their latest since late 2005 at 497,250 tonnes, while cancelled warrants stand at 60%.
Benchmark aluminium was up 1.5% at $2,989 a tonne, partly owing to the covering of short positions on worries about low stocks. The price earlier touched $2,998 for its highest since May 5.
Lead: Stocks at 38,850 tonnes, the lowest since 2007, have boosted lead. It was last up 0.6% at $2,173 a tonne, retreating from an earlier two-week high at $2,195.
Other Metals: Zinc gained 1.6% to $3,768 a tonne, tin was down 0.9% at $34,350 and nickel ceded 4.7% to $26,655.