LONDON: Copper prices climbed on Wednesday as a softer dollar and worries about low inventories spurred buying, but gains were capped by slowing economic activity in top consumer China.
Benchmark copper on the London Metal Exchange was up 1.5% at $9,852 a tonne at 1658 GMT.
“The market is very resilient given most industrial activity in China stops for the new year holiday,” said SP Angel analyst John Meyer. “Chinese growth will be slow at least until after the Winter Olympics and Paralympics.”
However, to cut air pollution ahead of and during the events, top metal producer China has shut down some energy intensive industries such as metal smelters, which could limit supplies for consumers in other countries.
Meanwhile, tin rose 0.9% to $43,150 a tonne, not far from the record high of $44,200 a tonne hit in January, after a militia attack in eastern Democratic Republic of Congo.
However, the attacks took place far from eastern Congo’s tin mines.
STOCKS: Copper inventories in LME approved warehouses at 84,875 tonnes have dropped 65% since August. Cancelled warrants - metal earmarked for delivery - at 32% of the total suggest more copper is due to be delivered out.
Concern about copper supplies on the LME market has seen the cash contract trade at a premium to the three-month contract for some months now.
DOLLAR: A weaker U.S. currency makes dollar-denominated metals cheaper for holders of other currencies, which could boost demand.
ALUMINIUM: Shortages created by power disruptions in China and Europe have pushed aluminium prices up 20% since early November. It was down 1.3% at $2,993 a tonne.
Even before the crisis hit, electricity’s share of aluminium production costs was 30-40%. It now accounts for 50% or more for many smelters, some of which have cut or shut capacity.
Acute aluminium shortages in Europe can be seen in the physical market duty-paid premium - paid above the LME price - at a record high of $460 a tonne.
OTHER METALS: Zinc was up 0.7% at $3,627 a tonne, lead gained 0.3% to $2,241 and nickel added 0.5% to $22,890.