Shanghai copper rangebound as rising inventories, weak demand offset dollar

Shanghai copper was rangebound on Tuesday, as rising inventories and sluggish demand ahead of the Lunar New Year holiday offset a weaker U.S. dollar.

The most-active copper contract on the Shanghai Futures Exchange closed daytime trading up 0.05% at 101,560 yuan ($14,695.41) a metric ton. It rose as much as 0.98% earlier in the session.

The benchmark three-month copper on the London Metal Exchange, meanwhile, declined 0.76% to $13,076 a ton as of 0700 GMT, after declining as much as 0.89%.

The U.S. dollar continued to weaken on Tuesday, making greenback-priced commodities more affordable to other currency holders.

Copper has been under pressure from rising inventories in warehouses registered with major exchanges, alongside weak demand in the run-up to China’s nine-day Lunar New Year break, starting February 15, when economic activity stalls.

Despite persistent longer-term supply constraints, copper prices are expected to stay rangebound, Chinese brokerage GF Futures said in a note.

Demand has cooled after Chinese downstream buyers wrapped up pre–holiday restocking, while visible inventories are rising globally and the COMEX–LME premium is narrowing, GF Futures said.

LME copper stocks rose to 184,300 tons as of Friday, up from 137,225 tons on January 9. Copper stocks in SHFE sheds registered a nine-week rise on Friday to 248,911 tons.

Meanwhile, Comex copper inventories continued to climb to a record 535,430 tons.

The Yangshan copper premium, a gauge of Chinese demand for imported copper, was at $38 a ton compared to $20 earlier. It is still low compared with above $50 in late December, indicating weak demand in China.

Among other SHFE base metals, tin soared 3.33%, lead rose 0.60%. Aluminium dipped 0.30%, zinc dropped 0.53% and nickel shed 0.19%.

Elsewhere on the LME, tin climbed 0.11%, lead was up 0.03%. Aluminium dropped 0.62%, zinc dipped 0.25% and nickel shed 0.63%.