LONDON: Copper prices rose after touching more than two-month lows on Thursday as support from a weaker dollar offset pressure from rising inventories and lacklustre demand in top metals consumer China. Three-month copper on the London Metal Exchange was up 0.5% at $9,582 a metric ton by 1346 GMT after hitting an intra-day low of $9,485.50, its weakest since April 17.
The metal, used in power and construction industries, was rising for the first time in five sessions. The dollar index was down almost 0.3% after US data showed weekly jobless claims drifted lower last week, but the number of people on unemployment rolls jumped to a 2-1/2 year high in mid-June.
A weaker US currency makes dollar-priced commodities more attractive for buyers using other currencies. Spot gold prices rose 1%. Meanwhile, copper stocks registered with the world’s big three exchanges have risen above 500,000 tons for the first time since August 2021. LME inventories have surged by 72% since mid-May to 177,750 tons, the highest in more than six months.
“The rise in total exchange copper stocks to over 500,000 tons is not something the market likes when it’s already under pressure from long liquidation,” said Ole Hansen, head of commodity strategy at Saxo Bank. After rallying to a record high of $11,104.50 on May 20, copper prices have fallen 14% on sluggish economic data from China. Adding to worries about weak physical copper demand in the country was data on Thursday showing China’s industrial profit growth slowed sharply last month.
Low local premiums and rising inventories in China argue against fundamental copper market tightness, TD Securities analysts said in a note.
“While the fundamental situation certainly looks promising in the years to come, the lack of evidence supporting current physical tightness has started to see the money manager positioning unwind,” TD Securities added.
In other metals, LME aluminium rose 0.1% to $2,515, zinc added 0.5% to $2,955, both nickel and tin gained 1.1% to $17,230 and $32,370, respectively. Lead fell 0.2% to $2,190.
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