LONDON: Copper moved higher on Thursday as concerns around tight inventories outside the US resurfaced and prices were supported by a weaker dollar after the Federal Reserve opted to keep interest rates steady.
Benchmark three-month copper on the London Metal Exchange was up 1.4percent to USD13,767 per metric ton in official open outcry activity, after declining in the previous two sessions.
The dollar index edged down 0.1percent, having hit a one-week low in the previous session as markets gauged possible Fed interest rate paths. A cheaper dollar can boost greenback-denominated commodities by making them more affordable for buyers using other currencies. Dwindling inventories, supply concerns and demand from China also offered support for copper, which is widely used in power, construction and manufacturing.
“The market is increasingly transitioning from one driven primarily by macro sentiment towards one characterised by genuine physical tightness,” StoneX analyst Natalie Scott-Gray wrote, noting weather-related disruption to mine supply and falling stocks on the LME and Shanghai Futures Exchange.
“These developments suggest tightening availability rather than purely speculative positioning,” she said. LME copper stocks declined by 6,900 tons to 255,400 tons, the lowest since February. The cash LME copper contract was trading at a USD25-a-ton premium over the three-month forward, underscoring tight near-term supply. ShFE copper stocks of less than 70,000 tons are the lowest since February 2024.
COMEX copper stocks, meanwhile, stood at a record 644,465 metric tons, almost double the LME and ShFE inventories combined, as metal continues to flow to the US ahead of possible import tariffs. Backwardation, a market structure where prices for prompt delivery are higher than those for future supplies, was also a feature of the aluminium and zinc spreads, with inventories of those metals also thin.
LME three-month aluminium nudged up 0.2percent to USD3,185 per ton, zinc rose 0.9percent to USD3,600, tin added 0.6percent to USD54,200, lead edged down 0.1percent to USD1,898 and nickel nudged up 0.1percent to USD17,160.
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