LONDON: Benchmark copper prices touched the highest level in nearly a month on Friday, propelled by firmer demand in top metals consumer China, while US prices narrowed their premium over London ahead of expected US tariffs.
Three-month copper on the London Metal Exchange (LME) was 0.1% higher at $9,090 a metric ton by 1700 GMT after touching the highest since Dec. 12 at $9,145. “The broader backdrop looks slightly bearish, but China looks good, actually, in terms of demand for base metals at the moment, so that’s probably helping to push prices up a bit,” said Dan Smith, head of research at Amalgamated Metal Trading.
The most traded February copper contract on the Shanghai Futures Exchange (SHFE) added 0.8% to 75,270 yuan ($10,264.73) a ton. Firmer Chinese demand was highlighted by a spike in the premium paid over SHFE prices to buy copper in the spot market to 145 yuan, the highest since September and compared to a discount of 40 yuan on Dec. 30.
US Comex copper futures reversed and went into negative territory, easing 0.4% to $4.29 a lb, or $9,458 a ton, representing a premium of $368 a ton over LME copper, down from about $400 on Thursday. Comex prices reflected investors attempting to price in the impact of hefty tariffs that US President-elect Donald Trump has vowed to impose on China and other countries.
“The one-year forward arbitrage of Comex over LME implies the market is pricing a 10% chance of a broad, or critical minerals specific, US import tariff of 10%,” Citi said in a note.
LME lead was the biggest gainer, advancing 2.5% to $1,976.50 a ton, partly driven by Commodity Trade Advisor (CTA) investment funds, which are largely driven by computer programs, said Robert Montefusco at broker Sucden Financial. “We saw a bit of a squeeze,” he said, adding that some of the buying was linked to index rebalancing flows, a five-day monthly process that kicked off on Wednesday.
LME data shows a large short position in January LME lead futures, with one party accounting for 30-39% of open interest. Among other metals, LME aluminium rose 1.3% to $2,572 a ton, nickel added 1% to $15,630, zinc climbed 0.8% to $2,870 and tin was little changed at $29,860.
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