LONDON: Copper prices edged higher in London on Monday, recovering from last week’s fall below recent technical averages, though dwindling pre-Christmas liquidity kept them in a tight range.
Three-month copper on the London Metal Exchange (LME) rose 0.1% to $8,949.5 a metric ton in official open-outcry trading.
The metal used in power and construction lost 1.2% last week as the dollar hit a two-year high, making metals less attractive for buyers using other currencies.
Adding further pressure, the International Copper Study Group said on Friday that the global refined copper market was in a 287,000 metric ton surplus for the first 10 months of 2024.
With a mean reversion strategy in play, copper is likely to strengthen back above the crucial $9,000 mark, Sucden Financial analysts said.
The US dollar has appreciated nearly 7% this year, creating significant headwinds for growth-dependent metals, but most posted gains, with the exception of nickel and lead.
Pressure from the dollar could ease next year only to be replaced by the prospect of tariffs threatened by US President-elect Donald Trump.
“The market appears to have already priced in moderate tariffs, but there is a risk that extreme tariff measures could undermine market confidence. China, the largest consumer of base metals, may offset this potential headwind through strong stimulus measures,” said WisdomTree commodity strategist Nitesh Shah.
“During its recent Politburo meeting, China indicated a willingness to intensify stimulus efforts but has not yet committed to a specific programme, opting to keep its powder dry until the scale of US protectionism becomes clearer.” LME aluminium rose 0.3% to $2,542.5 a ton in official activity, zinc climbed 1.4% to $3,014, lead gained 0.7% to $1,994 and tin added 0.7% to $28,875 while nickel firmed by 0.3% to $15,400.
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