Copper prices climbed to four-week highs on Monday due to signs of steadying growth in top consumer China, declining inventories and a softer dollar ahead of important data from China’s manufacturing sector.
Benchmark copper on the London Metal Exchange (LME) was up 1% at $8,184 a metric ton at 1035 GMT, having earlier hit $8,190, the highest since Oct. 2.
“China sentiment is improving, but volumes are light so copper’s movements are exaggerated,” one metal trader said. “It helps that the dollar appears to have peaked.”
Latest data from China showed profits at industrial firms rose for a second month in September due to expanding activity.
Surveys of purchasing managers in China’s manufacturing segment due later this week are expected to show expansion again in October, suggesting recent government support measures have helped boost sentiment.
Copper climbs on China optimism, technical signals
China last week approved a one trillion yuan ($137 billion) sovereign bond issue and passed a bill allowing local governments to front load part of their 2024 bond quotas to support investment and economic growth.
The Yangshan copper premium hit $91.50 a ton late last week, more than tripling since the start of August and the highest since November 2022, suggesting a rising need to import copper into China.
Falling stocks of copper in LME approved warehouses, those monitored by the Shanghai Futures Exchange and in CME registered warehouses have also helped lift confidence.
On the technical front copper faces strong resistance in the $8,200-$8,210 area where the 50-day and 200-week moving averages currently sit.
A major focus this week is a decision by the Federal Reserve on U.S. interest rates. This could influence the direction of the U.S. currency, which when it falls makes dollar-priced industrial metals cheaper for holders of other currencies.
Aluminium rose 1.5% to $2,253 a ton, zinc gained 0.5% to $2,484, lead was up 0.3% to $2,129, tin advanced 0.4% to $25,015 and nickel climbed 1.3% to $18,605.
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