Copper supported by weaker dollar, but rising supply caps gains

BEIJING: Copper prices climbed on Wednesday with support from a weaker US dollar ahead of key inflation data, while further gains were capped by a rising supply.

Three-month copper on the London Metal Exchange added 0.3% to $8,881 a tonne by 0413 GMT, its highest since April 4.

The US dollar slipped on Wednesday, making the greenback-priced commodity cheaper for non-dollar buyers.

Sentiment was also underpinned by stronger-than-expected credit growth data from China, with outstanding total social financing, a broad measure of credit and liquidity in the economy, growing 10% in March from a year earlier and hitting a four-month high.

The most-traded May copper contract on the Shanghai Futures Exchange advanced 0.7% to 69,010 yuan ($10,020.18) tonne.

The hope for more stimulus from China was weighed by rising supply from top producers, analysts at National Australia Bank (NAB) said in a research note.

China’s refined copper production in March jumped 14% from a year ago thanks to newly established capacity and sufficient raw materials supply, according to research house Antaike.

The output growth is expected to remain strong this month.

Among other metals, LME aluminium climbed 0.5% at $2,313.50 a tonne, nickel climbed 0.4% at $23,555, lead gained 0.6% at $2,099.50, zinc added 0.5% at $2,770, while tin dipped 0.4% to $23,630.

Copper prices reach one-week high on US dollar weakness

The share of Russian aluminium stocks in warehouses registered with the London Metal Exchange (LME) climbed to 53% of the total in March, or 220,575 tonnes, from 41% in January, data on the exchange’s website showed on Tuesday.

“As Russian product increasingly dominates LME on-warrant stocks, there are concerns emerging that LME prices will end up reflecting a benchmark price of Russian material, which is expected to trade at a discount to the spot market due to wide-spread self-sanctioning,” the NAB note said.

SHFE aluminium was little changed at 18,470 yuan, lead edged 0.1% up to 15,285 yuan, nickel rose 2.5% to 182,290 yuan a tonne, while zinc nudged down 0.2% to 21,985 yuan, and tin dipped 0.1% to 190,040 yuan.