Copper gives up gains as strong dollar and oil weigh

LONDON: Copper prices gave up early gains spurred by top consumer China’s return to the market on Thursday, with a strong dollar and rising oil prices offsetting concerns over tight supplies.

Benchmark three-month copper on the London Metal Exchange was down 0.4% at $14,415 a metric ton in official open outcry activity, having earlier touched its strongest since September 25 at $14,646.50.

Early expectations that Chinese buyers could restock after the country’s week-long holiday lent support to prices, said CRU principal analyst Craig Lang, noting low market stocks and mounting mine supply risks.

The Yangshan premium, a gauge of China’s appetite for copper imports, rose 5% from its last pre-holiday assessment to $125 a ton, its highest since November 2022.

A firmer dollar sent the entire LME complex lower, however, as the US currency edged towards its strongest in 18 months after minutes from the US Federal Reserve signalled that policymakers viewed inflation as the biggest risk to their outlook.

A stronger greenback makes dollar-denominated metals more expensive for investors using other currencies.

In Chile, workers are on strike at Antofagasta’s Centinela copper mine while BHP said this week that it had requested government mediation to avert a strike at the Escondida copper mine, the world’s biggest.

In the Philippines, copper and gold miner Philex Mining Corporation said on October 1 that a union of workers there had voted to strike at its Padcal mine.

The three mines account for nearly 5.5% of global copper mine production, Lang said.

LME copper stocks remain tight after 3,325 tons of orders for metal withdrawals from warehouses.

The cash LME copper contract was trading at a premium of $107.50 a ton over the three-month forward, up from a premium of about $89 on Wednesday, indicating growing near-term supply tightness.

Elsewhere, aluminium fell 1.6% to $3,068.50 a ton, touching a three-month low, while zinc slipped 0.7% to $3,736 and lead lost 1.2% to $1,873.

Nickel shed 0.9% to $15,590 and tin was down 2.5% at $52,950 after touching its weakest since September 17 at $52,860 earlier in the session.