Copper edges higher, finding support in China's rising factory activity

Copper prices edged higher on Wednesday as data showed Chinese factory activity returned to growth in September, though trading remained subdued ahead of a week-long holiday in the top metals consumer.

Benchmark three-month copper on the London Metal Exchange rose 0.23% to $14,471 a metric ton by 0330 GMT, while the most-traded November copper contract on the Shanghai Futures Exchange gained 0.21% to 109,530 yuan ($16,340.20) a ton, set to end a week shortened by the upcoming long holiday 0.52% lower.

China’s official manufacturing purchasing managers’ index rose to 50.1 in September from 49.8 in August.

A private RatingDog survey showed factory activity expanded at a faster pace: its PMI measurerose to a five-month high of 52.1 from 51.5.

Trading was subdued before China’s National Day holiday.

SHFE will close from Thursday and reopen on October 8.

Physical copper demand also eased heading into the break.

The domestic premium continued to weaken from the peak set on Tuesday to 1,050 yuan a ton.

But the Yangshan copper premium, a gauge of Chinese consumers’ appetite for imported materials, rose slightly to $119 a ton.

The US dollar remained firm, heading for a roughly 2% monthly rise, supported by higher US yields.

A stronger dollar makes greenback-priced metals more expensive for holders of other currencies. Oil also traded firm, with Brent crude hovering above $100 a barrel, keeping inflation concerns and expectations of another rate hike by the US Federal Reserve alive.

Among other LME metals, aluminium edged up 0.09%, zinc fell 0.23%, lead was flat, nickel gained 0.23% and tin dropped 0.93%.

On the SHFE, aluminium fell 0.35%, zinc lost 0.26%, lead declined 0.12%, nickel dropped 1.00% and tin was flat.