Onome Amuge
Copper prices extended their rally on Monday, supported by signs of tightening supply and a weaker US dollar, even as concerns over China’s faltering manufacturing sector continued to cast a shadow on demand prospects.
Three-month copper on the London Metal Exchange (LME) rose 0.24 per cent to $9,926 per metric tonne by mid-morning Asian trade, on track for a third consecutive session of gains. In Shanghai, the most-traded copper contract climbed 0.66 per cent to 79,740 yuan ($11,148) a ton, advancing for the second straight day.
Analysts said the upturn in prices reflected a narrowing arbitrage gap between London and Shanghai, which has made imports more profitable, coupled with an uptick in spot premiums,a signal of tightening availability in the physical market. “Prospects of slowing refined copper production also supported market sentiment,” ANZ analysts noted in a client briefing.
Supply signals have reinforced the bullish tone. Data from Chile, the world’s top copper producer, showed output edged up only 0.3 per cent year-on-year in July, suggesting stagnation in supply growth. Manufacturing production rose 2.7 per cent, a sharp deceleration from the 12 per cent jump recorded in June, adding to expectations that refined copper volumes could weaken in the months ahead.
The dollar index, which tracks the US currency against six peers, slipped 0.04 per cent to 97.79 on Monday, extending a monthly decline of more than 2 per cent. A softer dollar tends to support commodities priced in the currency by making them cheaper for holders of other currencies.
Still, the backdrop in China, the world’s largest consumer of copper remains fragile. Official data showed the country’s manufacturing sector contracted for a fifth straight month in August, as exports weakened under the weight of US tariffs, a prolonged property sector downturn, and eroding consumer confidence. Industrial profits also fell for a third consecutive month in July, underscoring the pressure on businesses from slowing demand and persistent factory-gate deflation.
The tension between supply-side constraints and demand-side weakness has kept investors cautious, analysts said, with copper caught between the bullish case for tightening inventories and the bearish drag of China’s sluggish recovery.
Elsewhere in base metals, trading was mixed. On the LME, aluminium eased 0.15 per cent to $2,611.50 a tonne, while tin fell 0.74 per cent to $34,760. Nickel gained 0.42 per cent to $15,485, lead edged up 0.13 per cent to $1,993.50, and zinc rose 0.16 per cent to $2,823.50.
On the Shanghai Futures Exchange, aluminium slipped 0.51 per cent to 20,625 yuan, lead eased 0.06 per cent to 16,840 yuan, and tin lost 1.16 per cent to 272,620 yuan. Nickel jumped 1.67 per cent to 123,320 yuan, while zinc advanced 0.36 per cent to 22,175 yuan.
