LONDON: Copper prices extended their rebound on Wednesday on a weaker dollar and on hopes for less aggressive interest rate hikes from the Federal Reserve and other central banks.
Aluminium slipped, however, after inventories surged.
Three-month copper on the London Metal Exchange gained 1.4% to $9,045.50 a tonne by 1115 GMT, after adding 0.6% on Tuesday, bouncing from a four-week low.
Copper joined oil and equities in a wider upswing on financial markets after investors regarded comments on Tuesday by Fed Chair Jerome Powell as dovish, focusing on his views that inflation was due to decline.
The most-traded March copper contract on the Shanghai Futures Exchange ended the day trading 0.9% higher at 68,640 yuan ($10,115.24) a tonne.
“The markets are moving on every indication of softening or tightening from the central banks,” said Nitesh Shah, commodity strategist at WisdomTree.
“After the Fed rate hike last week, there was a lot of hawkish commentary, but yesterday it was slightly more dovish and that’s giving the markets more confidence.”
Copper climbs on Powell’s remarks, supply headwinds
The dollar index fell on the back of Powell’s comments, making commodities priced in the U.S. currency less expensive for buyers using other currencies. Aluminium was the only LME metal in the red after data showed LME inventories soared 27% to 495,750 tonnes, the highest in about two months, after arrivals in Gwangyang in South Korea.
LME three-month aluminium eased 1% to $2,499 a tonne.
Last month, sources told Reuters that Glencore had delivered 40,000 tonnes of Russian aluminium to Gwangyang. Supply-side issues in copper, including First Quantum Minerals’ suspension of loading operations at a major port in Panama, also supported sentiment.
“This might support spot prices, but its actual impact on supply tightness remains to be seen as several smelters will start maintenance in March,” a source at a Chinese copper smelter said.
LME zinc climbed 0.9% to $3,163.50, lead rose 0.1% to $2,101, nickel gained 1.6% to $27,675 and tin advanced 3.4% to $28,000.
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