LONDON: Copper prices rose to a one-week peak on Monday as Chinese buyers returned after a week-long holiday, but further gains are unlikely due to generally weak demand in top consumer China, a strong dollar and rising inventories.

Benchmark copper on the London Metal Exchange (LME) traded 0.5% higher at $8,085 a metric ton in official rings from an earlier at $8,142, the highest since Oct. 2. Prices of the metal used in the power and construction industries last week touched $7,870, the lowest in more than four months.

“Things don’t seem to be improving in China. The property market is still in trouble,” a copper trader said.

The military clashes between Israel and Palestinian group Hamas were also a source of uncertainty for markets, traders said.

A higher US currency makes dollar-priced metals more expensive for holders of other currencies, which would eventually subdue demand and prices. Stocks of copper in LME approved warehouses at 170,425 tons are up more than 200% since the middle of July and at their highest since May 2022.

This rise combined with poor demand prospects have created a large discount for the LME’s cash over the three-month copper contract, which was last at $68.25, close to the 31-year peak seen last week. Latest data from China showed average daily home sales during the holiday were down 17%, based on floor area, compared with last year, despite a series of piecemeal support measures to restore confidence in an ailing property market.

“For the first time in over two decades, China’s materials-intensive growth cycle is unresponsive to government led macro-support,” said Liberum analyst Tom Price. “Its key commodity-consuming sectors of property and infrastructure are thoroughly built out...while economic activity there is stabilising somewhat, it remains weak and vulnerable.” In other metals, aluminium was down 0.6% at $2,227, zinc fell 0.3% to $2,502, lead rose 0.1% to $2,145, tin advanced 1% to $24,900 and nickel climbed 1.28% to $18,800.


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