LONDON: Copper prices were on track on Friday to register their biggest weekly gain in seven months, helped by falling inventory and expectations of more economic support from top consumer China. Three-month copper on the London Metal Exchange gained 1.1% to $8,405 a metric ton in official rings. On a weekly basis, the contract is so far up 3.3%, gaining the most since mid-July.
It has broken major technical barriers including 21-day, 50-day and 200-day moving averages. However, copper, widely used in power and construction, has so far lost 1.9% this month, with the market of top consumer China closed for a while for New Year celebrations. More support from Chinese government could come in varying forms, including measures to boost consumption, which could be positive for China’s base metals demand, said SEB chief commodity analyst Bjarne Schieldrop.
Last year’s clampdown on private sectors, and other measures that had a negative impact on consumer confidence, could be reversed as the Chinese government prioritises economic stability, Schieldrop said. “Overall, fundamentals of copper are still solid,” he added. The volume of copper stored in LME-registered warehouses dropped to 132,525 tonnes, reaching its lowest in six months.
The decline in copper availability has lent support to cash prices, reducing discounts against longer-dated contracts. The cash-to-three month spread last traded at $88 a metric ton, compared with a record high of $113.3 on Feb. 9.
The dollar index was flat after a pullback on Thursday following a surprise decline in January US retail sales. A weaker US currency makes dollar-priced metals less expensive for holders of other currencies.
In other metals, LME nickel was up 0.9% at $16,400 after Australia listed the battery metal as a “critical mineral” to support the crisis-hit sector.
The country’s nickel industry is facing thousands of job cuts after a jump in Indonesian supply saw prices plunge 40% in a year. Zinc gained 0.6% to $2,369 with continued inflows to Singapore on Friday, boosting its stocks to their highest in over 32 months. Aluminium rose 0.3% to $2,230, lead gained 0.5% to $2,053 and tin dropped 0.6% to $27,120. Meanwhile, LME aluminium edged 0.1% lower to $2,222.50 a ton.
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