Onome Amuge
The copper market closed bullish on Monday, lifted by a softer US dollar, continued outflows from London Metal Exchange (LME) warehouses and signs of stronger appetite from Chinese buyers.
Benchmark three-month copper on the LME rose 0.4 per cent to $9,935 a metric tonne, after touching a five-month high of $10,038 last week on growing expectations that the US Federal Reserve will cut interest rates later this month. A weaker greenback makes dollar-priced commodities cheaper for holders of other currencies, while also supporting investor sentiment across the broader metals complex.
Market optimism was also fuelled by China, the world’s largest consumer of the red metal. The Yangshan copper premium,a closely watched gauge of import demand, rose 1.8 per cent to $58 a tonne, its highest in three months. The yuan strengthened to a one-week high against the dollar, further bolstering the relative attractiveness of overseas copper purchases.
Although China’s August imports of unwrought copper fell month-on-month to 425,000 tons, they remained higher than a year ago. Shipments of copper concentrate, the feedstock for smelters, climbed to 2.76mn tonnes, a four-month high. Analysts at ANZ said lower treatment charges had failed to dampen Chinese demand. “Favourable import parity and prospects of weaker domestic production should keep refined copper imports strong in September,” the bank noted.
China’s broader trade data, however, pointed to a softening economic picture. Export growth slowed to a six-month low in August, while imports rose 1.3 per cent year-on-year, easing from 4.1 per cent in July. The figures underscore the fragility of China’s recovery, even as infrastructure investment and industrial demand continue to underpin commodities markets.
LME data showed further tightening in available copper stocks, with inventories falling by 2,125 tons to 155,825 tons. Cancellations, metal earmarked for delivery,rose by 8,500 tons in South Korea, signalling potential near-term supply tightness.
Other base metals market also strengthened as aluminium gained 0.8 per cent to $2,620.50 a tonne as on-warrant stocks dropped to 442,425 tons, the lowest since late July, following 32,000 tonnes of cancellations in Malaysia. Zinc added 0.5 per cent to $2,875, lead rose 0.3 per cent to $1,991.50, and tin edged up 0.2 per cent to $34,250. Nickel was flat at $15,230.
Copper has rallied almost 10 per cent over the past month, with traders betting that monetary easing in the US and resilient Chinese buying could offset concerns about global growth. Yet analysts caution that further gains may depend on confirmation of a Fed rate cut and sustained signs of industrial demand.
