Copper pulls back from five-week high as inventories rise

LONDON: Copper prices touched their highest level in over five weeks on Friday, but came off the peak as data showed inventories on the London Metal Exchange growing, highlighting an improving supply picture.

Three-month copper on the London Metal Exchange was up 0.1% at $8,565 per metric ton by 1005 GMT after touching the highest since May 10 at $8,634.

The metal pulled back on Friday after LME data showed over 16,350 tonnes of copper arrived into LME warehouses, boosting total stocks by 14%.

“As prices go higher, it would tend to flush any surplus metals out of the system. You can get metal popping up in unexpected places,” said Dan Smith, head of research at Amalgamated Metal Trading.

Copper is expected to see a global market surplus of 240,000 metric tons this year after a deficit of 180,000 tonnes in 2022, Liberum said in note.

LME copper has rebounded nearly 10% since touching the lowest in almost six months on May 24. It has climbed 2.3% so far this week, set for its third weekly gain.

Lower dollar and China stimulus hopes support copper

Smith said he was bullish on copper, but said the recent wider rally among other base metals was hard to justify and was largely being driven by speculators.

“When you’ve got high interest rates and weak manufacturing demand, you should see inventories going up significantly, but we’re not seeing a flood of metal onto the exchanges.”

Also supporting the market were growing hopes that China would unveil more measures to shore up its shaky post-pandemic recovery following a set of disappointing economic data.

The most-traded July copper contract on the Shanghai Futures Exchange ended day-time trade 1% higher at 68,630 yuan ($9,634.04) per metric ton.

SHFE copper stocks fell 20.1% to 61,090 metric tons on Friday, having dropped 70% from a February peak.

But actual consumption in China stayed subdued.

“Recently, higher prices have curbed our willingness to buy copper, given the slow demand in the traditional off-peak season,” said a Chinese copper rod producer.

LME aluminium gained 1% to $2,272.50 a metric ton, nickel added 0.2% to $23,045, tin gained 0.9% to $27,470, zinc climbed 0.7% to $2,496.50 and lead rose 0.4% to 2,138.50.