BEIJING: Copper prices rose on Wednesday amid prospects of better demand from top consumer China, although gains were limited by current weakness in physical demand and high inventories in the world’s second-largest economy.
Three-month copper on the London Metal Exchange was up 0.4% at $10,544.50 per metric ton as of 0731 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange gained 0.9% to 85,470 yuan ($11,792.06) a ton.
China’s latest measures to support its ailing property sector have boosted copper demand prospects. Some of the megacities, including Shanghai, have lowered the minimum downpayment ratios for home buyers and relaxed some restrictions.
The International Monetary Fund upgraded its forecast for China’s economic growth this year to 5% after a “strong” first quarter, from an earlier estimate of 4.6%. Macro factors are favouring copper, even as end-users have reduced consumption following price increases, Huatai Futures analysts said.
Prices to purchase copper from the spot market remained at a discount to futures prices, and so did that for copper imports. Waning demand and strong output contributed to rising inventories in China. Copper stocks in SHFE warehouses stood close to a four-year peak.
Also limiting copper’s gains, the dollar held steady amid wagers that the US Federal Reserve is unlikely to cut rates until later this year, while investors awaited key inflation readings due this week.
A stronger dollar makes it more expensive to buy the greenback-priced commodity. LME aluminium increased 1.6% to $2,771 a ton, nickel added 0.9% to $20,645, zinc was up 1.3% at $3,139.50, tin rose 0.9% to $34,240, and lead was unchanged at $2,345.
SHFE aluminium increased 1.6% to 21,520 yuan a ton, zinc rose 1.9% to 25,350 yuan, lead advanced 1.3% to 19,040 yuan and tin was up 1.4% at 282,060 yuan, and nickel was stable at 155,670 yuan.
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