Copper climbs on AI rebound, China demand strength

Copper rose on Tuesday as sentiment around AI stocks recovered and demand strengthened in top consumer China, although higher oil prices and a firmer dollar capped gains.

Benchmark three-month copper on the London Metal Exchange was up 0.7% to $14,421.50 per metric ton as of 1030 GMT after ending the previous session little changed.

Prices were finding support from rebounding AI stocks, with demand for the metal expected to benefit from AI infrastructure expansion, and supply remained constrained, particularly in China, said ING commodities strategist Ewa Manthey.

The surge in the Yangshan premium, the closely watched gauge of China’s appetite for copper imports, which hit a nearly 13-year high of $178 a ton on Monday, highlights the scramble for available metal, Manthey added.

“That tightness should continue to provide a floor under prices, although at these elevated levels we could see some resistance from price-sensitive demand.”

The cash LME copper contract was trading at a $206-a-ton premium over the three-month forward, the most since August 27.

LME copper stocks rose last week, but the heavy concentration of the inventories in North America added to concerns about regional supply bottlenecks.

“US inventory accumulation continues to limit the headline price, while tight ex-US availability and constrained concentrate supply preserve the underlying support,” Sucden Financial said in a note.

In China, stocks have waned as smelters there entered maintenance. Last week, Shanghai Futures Exchange copper stocks fell more than 25% to 54,356 tons.

The rest of the LME complex was broadly positive on improving macroeconomic sentiment, although a stronger dollar, which makes greenback-denominated metals more expensive for investors using other currencies, and rising oil prices applied some pressure.

Aluminium gained 0.3% to $3,048.50 per ton, while zinc rose 0.7% to $3,838.50, notching its highest since September 30.

Nickel and tin both added 0.6% to $15,650 and $51,315, respectively, while lead was the laggard, losing 0.1% to $1,920.50.