Copper hits six-week highs

LONDON: Copper climbed to six-week highs on Thursday as lower inventories triggered a flurry of buying that took prices through a key technical level, though a firmer dollar and concern about demand in China erased the gains.

Benchmark copper on the London Metal Exchange (LME) was little changed at $8,265.50 a metric ton in official open-outcry trading. Prices of the metal used in power and construction earlier touched $8,321.50, for its highest since Oct. 2.

Copper stocks in LME-registered warehouses have been rising, but latest data from the exchange shows a drop of 2,300 tons to 181,950 tons. “A knee-jerk reaction to the stocks and the dollar started it and the technical break created momentum,” one copper trader said, adding that low volumes had exaggerated the move. “Focus still on China demand outlook, which doesn’t look healthy.”

The dollar index was initially weaker but rebounded as traders took incoming economic data as signalling that the US Federal Reserve will wait longer before cutting interest rates.

A stronger US currency makes dollar-priced commodities more expensive for holders of other currencies, which could curb demand. Copper broke through resistance at the 100-day moving average at $2,285 before paring gains. Traders said the next upside barrier was the Sept. 29 high of $8,377.

Worries about demand in China, which accounts for nearly half of global copper consumption, were reinforced by new home prices falling for a fourth month in October. Elsewhere, zinc prices came under pressure after stocks in LME warehouses nearly doubled to 133,200 tons after months of declines, which on Wednesday helped to push prices of the galvanising material to a six-week high of $2,667.50. Zinc shed 2.7% in official activity to $2,584 a ton.

In other metals, aluminium slipped 0.6% to $2,219, tin dipped 0.1% to $25,290 and nickel fell 1.2% to $17,215 while lead gained 0.8% to $2,263.