LONDON: Copper prices rebounded on Monday on a weaker dollar and after data from top metals consumer China came in better than expected.
Benchmark three-month copper on the London Metal Exchange was up 0.6percent at USD12,885 a metric ton by 1030 GMT, after two straight sessions of declines.
LME copper had touched a one-week low on Friday on profit-taking and concerns about weak Chinese demand, having pulled back from a record peak of USD13,407 hit on Wednesday.
It has surged 31percent over the past six months, partly on worries that mine disruptions will cause shortages this year. “Today’s copper rebound is largely macro- and dollar-driven after Trump’s tariff threats against several European countries weakened the US dollar and triggered broad metals buying,” said Ewa Manthey, commodities strategist at ING.
“The move was reinforced by Chinese GDP meeting the government’s target, which helped stabilise demand sentiment.” The dollar index fell after US President Donald Trump said he would impose an additional 10percent import tariff from February 1 on goods from eight European nations until the United States is allowed to buy Greenland.
A weaker dollar makes commodities priced in the US currency more expensive for buyers using other currencies. Investors were encouraged by data showing China’s industrial output rose 5.2percent in December from a year earlier, faster than in November and higher than expected.
Also, economic growth in the world’s second-largest economy in the fourth quarter was slightly better than forecasts. The most-active copper contract on the Shanghai Futures Exchange closed daytime trading down 0.7percent at 101,180 yuan (USD14,531.51) a ton as investors there continued to book profits.
They were also concerned about weak demand at elevated prices as copper inventories in warehouses monitored by SHFE continued to rise for a sixth consecutive week.
Deliverable copper inventories climbed 18.3percent to 213,515 tons on Friday, a nine-month high. Among other metals, LME aluminium was little changed at USD3,133.50 a ton, zinc added 0.3percent to USD3,217.50, lead gained 0.5percent to USD2,054, nickel jumped 2.7percent to USD18,060 and tin dipped 0.2 percent to USD47,910.