Copper and aluminium climb as weak dollar extends metals rally

LONDON: Copper moved higher on Wednesday while aluminium and zinc notched multi-year highs after the U.S. dollar slid to a four-year low and investors continued to pile in with bullish bets on industrial metals.

Benchmark three-month copper on the London Metal Exchange was up 0.6% at $13,087 a metric ton in official open-outcry trading. Aluminium added 1.7% to $3,261, touching its highest since April 2022 and zinc was up 1.2% at $3,392 after striking its highest since January 2023.

The dollar index hit its lowest since February 2022 on Tuesday after U.S. President Donald Trump said the value of the greenback was “great”. A weaker U.S. currency makes dollar-denominated metals more affordable for those holding other currencies and can boost demand.

Analysts at brokerage Sucden Financial said on a webinar on Wednesday that the rally in base metals was being driven by macro positioning rather than metals-specific fundamentals.

Copper climbs, tin under pressure from China position limits

“What we’ve been seeing with the specs (speculative investors) in gold and silver, they’re all piling into the base metals, too,” Sucden’s Robert Montefusco said.

The cash LME copper contract was trading at a $90 a ton discount to the three-month forward, suggesting little need for near-term metal, while the Yangshan premium, a measure of appetite for copper imports in top metals consumer China, sank to an 18-month low of $20 a ton.

Sucden’s head of research, Daria Efanova, said Chinese producers were offloading copper onto the LME to de-risk ahead of the Lunar New Year holiday in February, when liquidity is likely to be thin and the market could become even more volatile.

Aluminium’s jump came after Goldman Sachs raised its first-half average price forecast to $3,150 a ton, from $2,575, citing low inventories, doubts over power availability for new smelters in Indonesia and robust global demand growth from electric vehicle producers and power grids.

Elsewhere, lead edged up 0.1% to $2,022 a ton, nickel gained 1.3% to $18,400 and tin climbed 2.5% to $56,250 after touching a record $58,340 on Tuesday.