LONDON: Copper prices rose on Thursday as the U.S. dollar eased and on the back of stable manufacturing demand from top consumer China.
Three-month copper on the London Metal Exchange (LME) was up 0.7% at $8,250.50 a metric ton as of 1202 GMT.
Metals got support as the dollar index, which had reached a three-month high earlier this week, slipped back. A weaker U.S. currency makes dollar-priced metals less expensive for holders of other currencies.
Nonetheless, investors expect U.S. interest rates to stay high after surprisingly hot U.S. inflation figures released on Tuesday, suggesting a delay in the first Federal Reserve rate cut.
“The manufacturing cycle already reached a lower point, bearish sentiments should normalise. China’s manufacturing data is holding up quite well, its resilience is still under-appreciated,” said Carsten Menke, commodity analyst with Julius Baer.
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China’s official purchasing managers’ index (PMI) rebounded slightly in January month-on-month, but was still below the 50-mark separating growth from contraction.
Julius Baer set its three-month target for copper at $8,500 a ton and also expects higher prices longer-term, based on the lack of greenfield projects.
“2025 is when we see more issues in supply from mining. The market will pay a price for underinvestment from next year onward,” Menke added.
Also providing support to copper, LME daily data showed that copper stocks in LME-registered warehouses fell to 132,525 tons, the lowest level since September.
LME zinc was up 1.4% at $2,344.5 a ton after another 5,000 tonnes of inflows into LME warehouses in Singapore, bringing the total to 259,825 tons, its highest since June 2021.
For the rest of base metals, LME aluminium edged 1.2% higher to $2,040.50 a ton, nickel was up 1% at $16,505 , lead climbed 1.2% to $2,040.50. Tin eased 0.4% to $27,350.
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