LONDON: Copper prices rose on Tuesday due to high demand from top consumer China ahead of its May holiday, concerns about tight nearby regional supply, and a stronger yuan currency.
Benchmark three-month copper on the London Metal Exchange (LME) was up 0.9% to $9,460 per metric ton in official open-outcry trading, but failed to break through resistance at its 50-day moving average of $9,489.
“We are seeing a trend of restocking in China in advance of the May Day holiday,” said Arthur Parish, an analyst at SP Angel. The mainland Chinese market is due to close from May 1 for a five-day Labour Day holiday.
The Yangshan copper premium, which reflects demand for copper imported into China, was last at $93 per ton, its highest price since December 2023.
This premium is up 6% since Friday, when official data showed a 32% weekly drop in copper inventories in warehouses monitored by the Shanghai Futures Exchange. These inventories are expected to show further decline in the next SHFE data due on Wednesday, said Alastair Munro, senior base metals strategist at broker Marex, who added that this topic would remain crucial in May.
“The restocking requirement was exacerbated after inventories were redirected from Asia into the US amid the tariff-fuelled jump in COMEX premiums,” Parish said. Copper inventories in COMEX-owned warehouses are up 40% so far this month as Washington continues its investigation on possible new US copper import tariffs, keeping the COMEX premium over the LME benchmark at an unusually high $1,443 per ton.
The spread between the LME cash copper and the three-month contract widened the premium to $30 a ton compared to a discount of $16.5 a week ago.
This premium reflects LME market positioning where one entity holds between 40% and 50% of the metal available to the market, said a trader.
Meanwhile, the surplus in the global copper market is expected to increase this year to 289,000 tons from last year’s 138,000 tons and to persist next year, according to the International Copper Study Group.
China’s yuan strengthened to a one-month high against the dollar on Tuesday, providing further support to Chinese buying activity. In other London metals, aluminium rose 1.2% to $2,462 a ton in official activity, zinc added 1.0% to $2,660, lead gained 0.3% to $1,972, tin climbed 0.7% to $32,250, and nickel fell 0.4% to $15,560.
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