Copper set for weekly gain as China demand offsets US policy pressure

LONDON: Copper was set to end the week higher on Friday, as stronger physical demand in China helped withstand pressure from US tariff uncertainty and higher interest rates.

Three-month copper on the London Metal Exchange rose 0.3percent to USD14,539 a metric ton, and was on track to end the week more than 2percent higher.

The most-traded copper contract on the Shanghai Futures Exchange closed 1.4percent higher at 109,620 yuan (USD16,366.57) a ton, ending the week up 0.8percent.

Signs of firmer physical buying in China have strengthened after copper retreated from record highs last week, helping offset headwinds from US policies.

Washington has yet to decide whether to impose tariffs on refined copper, Reuters reported last week, while the Federal Reserve raised rates by 25 basis points this week and indicated another increase could follow this year.

Copper’s resilience was reflected in physical-market premiums. The Yangshan copper premium, a gauge of Chinese demand for imported copper, rose to USD121 a ton on Thursday, its highest since October 2022. The premium has climbed from USD85 at the end of last week. The premium paid over SHFE copper remained elevated at 630 yuan a ton on Thursday, slightly below 645 yuan the day earlier as the exchange prices recovered.

However, copper stocks in warehouses monitored by SHFE rose 2.4percent to 56,073 tons, according to the exchange’s weekly stock report on Friday, after a three-week decline that had brought the inventories to their lowest since January 2024. The LME tightness continued to ease, as stocks rose to 255,900 tons as of Wednesday and a near-term contango persisted, with the cash copper’s discount against three-month at USD7.5 a ton. Copper also benefited from softer oil prices. Easing concerns over Saudi supply disruptions outweighed fresh fighting between Saudi Arabia and Iran-backed Houthis in the Middle East.

Brent crude fell nearly 1percent but remained above USD100 a barrel. LME aluminium fell 0.2percent and nickel slipped 0.3percent, while zinc rose 0.5percent, lead gained 0.2percent and tin climbed 0.9percent.

SHFE aluminium rose 0.7percent, zinc advanced 1.6percent, lead gained 2.0percent, nickel added 1.0percent and tin climbed 2.0percent.