LONDON: Copper prices climbed to 16-month highs on Thursday as worries about shortages due to supply disruptions and a lower dollar outweighed weak demand prospects in leading consumer China. Benchmark copper on the London Metal Exchange traded up 1percent at USD10,479 a metric ton in official rings from an earlier USD10,520.5, the highest since May last year when prices of the industrial metal hit record highs above USD11,100 a ton.
Latest on supplies came from Indonesia where Freeport-McMoRan’s Grasberg operation suspended operations on September 8 after a deadly mud slide. The suspension at Grasberg follows other large disruptions this year including Kamoa-Kakula in the Democratic Republic of Congo and El Teniente mine in Chile.
“Copper is also rising because of the dollar, which is under more pressure because of the US government shutdown. It was already under pressure from tariff issues and the US economy slowing,” said Panmure Liberum analyst Tom Price.
A lower US currency makes dollar-priced metals cheaper for holders of other currencies which could boost demand for industrial metals. The US government has shut down much of its operations after partisan divisions prevented Congress and the White House from reaching a funding deal.
Factory activity shrank in much of the world last month, private surveys showed this week as signs of a slowdown in US growth and the anticipated impact of President Donald Trump’s tariffs added to pressure from weak Chinese demand.
Focus was also on zinc stocks in LME registered warehouses which at 40,350 tons have dropped 66percent since the middle of July to their lowest since March 2023. Concerns about the availability of zinc on the LME has fuelled a surge in the premium for the cash contract over the three-month forward to three-year highs around USD80 a ton compared with a USD6 discount in July.
Three-month zinc was up 1.1percent at USD3,020 after earlier hitting a nine-month high at USD3,032 a ton. In other metals, aluminium climbed 0.6percent to USD2,704.5, lead rose 0.4percent to USD2,018.5, tin advanced 0.8percent to USD36,300 and nickel added 0.6percent to USD15,280 a ton.
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