Copper supported by hopes for end to US govt shutdown

LONDON: Copper prices edged higher on Wednesday, supported by optimism over an expected end to the US government shutdown while the market awaited the release of loans data from top consumer China to gauge demand prospects.

Benchmark copper on the London Metal Exchange was up 0.2percent at USD10,853 a metric ton in official open-outcry trading. It hit a record high of USD11,200 last month on mine supply shortages caused by disruptions including an accident in Indonesia.

The US House of Representatives is due to vote on Wednesday on a compromise that would restore funding to government agencies and end a shutdown that started on October 1.

Traders said the expected return of US economic data, which should help investors and the Federal Reserve to judge the state of the US economy, had supported prices this week.

Fed decisions on interest rates would determine the direction of the US dollar, a weakening of which makes dollar-priced metals cheaper for holders of other currencies.

However, expectations of weak bank lending in China was weighing on sentiment, as were forecasts of a drop in total social financing, which analysts study to assess metals demand.

Elsewhere, zinc stocks in LME-registered warehouses are near their lowest since February 2023 at 35,875 tons. Low stocks have created a hefty premium for the cash zinc contract over the three-month forward, which would normally attract metal to the exchange.

That has failed to materialise this time because of shortages on the physical market.

Zinc stocks in warehouses monitored by the Shanghai Futures Exchange have also started to slide. At 100,208 tons, they have dropped 8percent over the past couple of weeks. Three-month zinc was down 0.3percent at USD3,058 a ton.

Analysts say China’s rising zinc concentrate imports and metal production should help to ease the tight market but note that this will take time because so much global capacity has been suspended because of high power costs.