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LONDON: Copper prices climbed to the highest levels in 22 months on Thursday as funds extended their buying spree, while the dollar weakened and inventories tightened.

The rally that has fuelled gains of 13% in copper so far this year contrasted, however, with lacklustre physical demand for copper in the biggest consumer China, analysts said.

Three-month copper on the London Metal Exchange gained 1.3% to $9,705.50 per metric ton in official open-outcry trading, having touched $9,739, the highest since June 2022.

The most-traded June copper contract on the Shanghai Futures Exchange closed up 2.8% at 78,780 yuan ($10,882.42) a ton. “The market is still digesting the real impact of the sanctions on Russian materials, and in the near-term, inventory cancellations on the LME are tightening stocks levels,” said Amelia Xiao Fu, head of commodity market strategy at Bank of China International.

Available inventories on the LME fell by 15,200 tons to a one-month low of 90,400 tons after investors gave notice to the exchange they wanted to remove inventories, data showed on Thursday.

Data on speculative positions showed that there was still more room for investors to increase bullish bets, but if LME prices touched $10,000 a ton, they would run into profit taking, Fu added.

Also bolstering the market was a weaker dollar index, which fell for a second day after a rare warning by the finance chiefs of major nations. A softer dollar makes greenback-priced metals cheaper for buyers using other currencies.

A trader said the price rallies across base metals were also exacerbated by short-covering. LME tin climbed to $33,945, its highest since June 2022, before paring gains to $33,690, a rise of 2.8%. The LME cash tin contract traded at a $350-a-ton premium to the three-month contract, the biggest premium since July 2023, after inventories in LME-approved warehouses have slid 45% so far this year.

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