LONDON: Copper prices rose on Wednesday as a lower dollar and expectations of further stimulus to boost economic growth in top consumer China boosted sentiment.
Benchmark zinc on the London Metal Exchange (LME) hit a three-week high of $2,491 a ton after Swedish miner Boliden said it will suspend production at Europe’s largest zinc mine - in Ireland - within the next month owing to “unsustainable financial losses”.
LME copper was up 0.6% up at $8,509 per metric ton at 1610 GMT after touching a low of $8,384. Prices of the metal used in power and construction hit a five-week high of $8,515.50 on Tuesday.
“People are expecting to see China do more for growth. Whether that helps metals will depend on what sort of stimulus,” one metals trader said. “But it’s pretty quiet, people are waiting to see what the Fed does and says on interest rates.” China’s central bank is widely expected to cut the borrowing cost of medium-term policy loans for the first time in 10 months on Thursday, a Reuters poll showed.
It cut its seven-day reverse repo rate and standing lending facility (SLF) rate by 10 basis points on Tuesday, signalling possible easing for longer-term rates to revive demand and restore investor confidence.
The dollar fell after unexpectedly soft US inflation data cemented the view that the Federal Reserve will not raise interest rates later on Wednesday, making dollar-priced metals cheaper for holders of other currencies.
Other base metals were also supported by the weaker dollar.
Aluminium was up 0.9% at $2,253 per metric ton, lead gained 1.6% to $2,115, tin added 2.8% to $26,800 and nickel rose 3.6% to $22,740.
Zinc climbed 4.2% to $2,482 per metric ton.
Traders said some concerns over supplies on the LME market are why the discount for cash zinc over the three-month contract flipped into a premium on Tuesday.
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