LONDON: Copper prices edged up on Wednesday as a weaker dollar helped to extend the support gained from this week’s 90-day extension of the tariff truce between the United States and top metals consumer China.
Benchmark copper on the London Metal Exchange rose 0.1% to $9,854 a metric ton by 1000 GMT. It hit $9,865 on Tuesday and Wednesday, the highest since July 25.
“The 90-day extension for the U.S.-China trade discussions has been welcomed and helped all base metals rise yesterday. Copper is holding onto those gains with the aid of a weaker U.S. dollar,” said Nitesh Shah, commodity strategist at WisdomTree.
The U.S. currency weakened, making dollar-priced commodities more attractive for buyers using other currencies, on bolstered expectations of a Federal Reserve rate cut next month, with President Donald Trump’s attempts to extend his grip over U.S. institutions also undermining the currency.
Sets of data from China due this week may provide clearer direction to the base metal complex as any weakness could bolden the case for economic stimulus, Shah said.
China’s new yuan loans contracted by 50 billion yuan ($6.97 billion) in July, falling well short of analysts’ forecasts and plunging from 2.24 trillion yuan in June, according to Reuters calculations based on data released by the People’s Bank of China.
Copper prices steady as supply concerns ease
Annual growth of China’s outstanding total social financing, used by analysts as a gauge of industrial metals demand, rose to 9.0% last month from 8.9% in June.
Suspension of production at a major lithium mine by Chinese battery giant CATL earlier this week as it applied to renew its mining licence raised hopes of a broader crackdown on overcapacity in other sectors.
“China has demonstrated its determination to stem ‘involution’ with the halting of CATL’s lithium mine. We are watching to see if China will address copper refining overcapacity through similar measures, which could lend support to prices,” Shah said.
LME aluminium rose 0.4% to $2,629.50 a ton, zinc fell 0.1% to $2,844.50, lead lost 0.4% to $2,008, tin eased 0.4% to $33,725, while nickel added 0.1% to $15,335.
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