Concerns about low stocks set copper on track for monthly gain

LONDON: Copper prices were little changed on Friday and on track to have risen 3percent in July following increased risk appetite in equity markets and worries about a lack of visible stocks outside the US Benchmark three-month copper on the London Metal Exchange was steady at USD13,798 a metric ton in official open-outcry trading after hitting USD13,883, its highest level since July 22, earlier on Friday.

“Copper enters August with supportive fundamentals,” said ING commodities strategist Ewa Manthey. “The market is still facing a supply deficit and limited inventory buffers outside the US, leaving prices vulnerable to any further disruptions or signs of stronger demand.”

Available copper stocks in the LME-registered warehouses fell 50percent in July as large volumes were marked as being prepared for delivery out and are currently at 101,650 tons, the lowest since mid-January.

Indicating some tightness for nearby supply, the premium of the cash LME copper contract over the three-month forward was at USD40 a ton on Thursday, its seven-month high, versus a discount of USD49 at the start of July.

China’s yuan rose to its highest level against the dollar in more than three years on Friday, making dollar-priced metals more attractive for the Chinese buyers.

However, a recent wave of demand in the country faded, with the Yangshan copper premium, a gauge of interest in importing metal to China, stabilising at USD112 a ton since hitting USD115, the highest since November 2022, on July 22.

Weighing further on the overall sentiment, China’s factory activity unexpectedly slipped into contraction in July, pressured by shrinking new orders.

Among other LME metals, aluminium lost 0.5percent to USD3,178.5 in official activity, although the metal is still up 3percent this month due to worries about shipments from the Gulf region amid the Iran war. “Supply conditions are improving, particularly as Middle Eastern production recovers and Chinese exports remain elevated, but the market is still expected to remain in deficit,” Manthey said.

LME zinc rose 0.2percent to USD3,630, lead fell 0.1percent to USD1,894, tin was unchanged at USD55,000 and nickel added 0.3percent to USD17,325.