LONDON: Copper prices rose on Friday as optimism about demand in top consumer China, a balanced market, historically low inventories in London Metal Exchange approved warehouses and a lower dollar triggered fresh buying. Benchmark copper on the LME was up 1.1% at $6,745 a tonne at 1655 GMT. Prices of the metal, used widely in the power and construction industries, touched a 26-month high at $6,830 a tonne earlier this month.
Analysts at CRU estimate Chinese demand dropped 15% in the first quarter due to Covid-19. "But there has been a strong recovery in the second quarter. We expect Chinese refined copper demand will grow 1-2% this year."
"Copper should remain supported in the mid $6,000s. Much of the risk in the short term comes from non-copper specific factors, namely the dollar, further fund inflows, government stimulus measures or the progression of Covid-19."
Strong Chinese copper demand can be seen in its imports, which rose to a record high of 762,210 tonnes in July. Imports were up 38% from a year earlier in the first eight months of 2020 at 4.27 million tonnes.
Stocks of copper in LME warehouses, at 75,550 tonnes, are at their lowest since 2005, when the commodity price bull run took off, triggered by accelerating Chinese demand. Aluminium traded down 0.7% at $1,777 a tonne, zinc gained 2.4% to $2,474, lead rose 0.2% to $1,887, tin added 0.3% to $18,050 and nickel gained 1.6% to $15,075.
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