Lower dollar fuels copper's ascent

Copper climbed on Thursday, boosted by a lower dollar after the US central bank left rates unchanged and some expectations of steady demand in top consumer China. Benchmark copper on the London Metal Exchange ended up one percent at $4,896.5 a tonne. The metal used widely in power and construction touched a two-week low of $4,830 a tonne on Wednesday.
The Fed said near-term risks to the economic outlook had diminished, but gave no firm indication of whether it would raise rates at its meeting in September. Demand for copper in China, which accounts for nearly 50 percent of global consumption estimated at around 22 million tonnes this year, has fallen sharply in recent years as growth and investment spending has slowed. "Demand is in better shape than many people recognise, we'll likely see pretty good Chinese demand to come due to spending on infrastructure and the power grid," said Dan Smith, analyst at Oxford Economics.
"The pipeline of new copper projects is steadily thinning, $4,900 is relatively cheap for copper, we're more likely to see it higher than lower over the next few months." However, traders say producers have been hedging or selling their output forward when copper approaches or climbs above the $5,000 a tonne level. Clues to Chinese demand will come on Monday from surveys of purchasing managers in manufacturing, which probably struggled to grow in July, according to a Reuters survey.
"Apparent copper demand year-to-date in China is up 14 percent, well ahead of estimates at the start of the year when the consensus was flat to small up, similar to 2015," Liberum analysts said in a note. "The driver has been huge fixed asset investment by the state, particularly in infrastructure, that has offset the decline in private fixed asset investment."
Nickel ended up 3.2 percent at $10,695 a tonne on worries about ore supplies from the Philippines and a pollution-related crackdown in China's nickel pig iron smelters in Linyi city, Shandong. Three-month aluminium rose 1.1 percent to $1,609, zinc was up 1.3 percent to $2,205, lead rose 0.2 percent to $1,803 and tin added 0.4 percent to $17,775.