LONDON: Copper prices came under pressure from a stronger dollar on Friday, but losses were limited due to London Metal Exchange (LME) data showing rising amounts of metal waiting to leave its registered warehouses.
Consumers, producers and traders use the LME as a market of last resort. They deliver surpluses to LME warehouses and take metal out of the system when they are short.
Benchmark copper on the LME was little changed at 9,090 a metric ton by 1224 GMT.
LME data shows copper stocks in its warehouses rising 4,400 tons to 272,825 tons. But cancelled warrants – metal earmarked for delivery – jumped 8,950 tons taking the total to 16,650 tons.
Most of that cancelled metal is in LME warehouses in Kaohsiung, Taiwan. Traders say it is headed for top consumer China, where imports of copper and products in November hit a one-year high.
Meanwhile copper stocks in warehouses monitored by the Shanghai Futures Exchange (ShFE) have been sliding, suggesting rising demand. At 84,557 tons, they have nearly halved since the middle of October.
“The market is looking at the cancelled warrants and copper stocks in Shanghai,” a copper trader said, adding that the dollar would continue to weigh on prices of industrial metals.
A higher U.S. currency makes dollar-priced commodities more expensive for holders of other currencies, which would subdue demand and prices. The dollar has been boosted by the possibility of the U.S. Federal Reserve cutting rates more slowly next year.
“We see a significant oversupply in 2025 at 491,000 tons,” said BNP Paribas analyst David Wilson, adding that would be the largest surplus since 2020 and make “copper much more vulnerable to dollar strength than other industrial metals”.
Also weighing on sentiment was a meeting of Chinese officials on economic policy which repeated pledges to issue debt, lower interest rates and support growth but offered nothing new to excite investors.
In other metals, aluminium was up 0.3% at $2,607 a ton, zinc gained 1.3% to $3,114, lead slipped 0.1% to $2,003, tin retreated 0.2% to $29,460 and nickel was flat at $16,165.
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