LONDON: Copper prices climbed to a one-month high on Tuesday after the central bank of top metals consumer China lowered a short-term lending rate for the first time in 10 months and data showed US inflation rose moderately.
Benchmark copper on the London Metal Exchange (LME) was up 1.9% to $8,470 a metric ton by 1609 GMT, after touching $8,515.5, its strongest since May 10 and the current level of the 50-day moving average.
US consumer prices rose moderately in May, leading to the smallest annual increase in inflation in more than two years.
Earlier, base metals got a boost after China cut rates to help restore market confidence and prop up a stalling post-pandemic recovery.
“The industrial metals sector trades higher after the surprise rate cut from China’s PBOC, raising speculation that a larger economic support package could be unveiled soon, perhaps this week,” said Ole Hansen, head of commodity strategy at Saxo Bank.
The dollar index lurched lower after the US data, making dollar-denominated metals more attractive to buyers holding other currencies.
Copper, used in power and construction, is trading above the 200-day moving average of $8,384, and a break above $8,450, its March and April lows, could attract additional momentum buying, Hansen said.
On-warrant copper stocks in LME-registered warehouses registered a daily fall of 275 metric tons to a two-month low of 41,375 tonnes, LME data showed on Tuesday.
Providing support to base metals from the supply side, a fire overnight at Sweden’s Ronnskar smelter - a major producer of copper, zinc, lead and other metals - has halted output until further notice.
LME aluminium advanced 0.3% to $2,234.5 per metric ton, zinc rose 1.2% to $2,378.5, tin gained 0.9% to $26,120 and lead added 0.3% to $2,079.
Nickel climbed 5.9% to $21,970, a one-month peak.
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