Copper rises on signs of improving China demand, LME stock draw

Copper prices rose on Tuesday, as stock withdrawals in South Korea relieved some oversupply pressure and as signs emerged of improving demand from China.

Three-month copper on the London Metal Exchange (LME) rose 0.1% to $9,640 per metric ton by 0748 GMT, while the most-traded August copper contract on the Shanghai Futures Exchange (SHFE) closed up 0.4% at 78,690 yuan ($10,822.00) a ton.

At the LME Gwangyang warehouse in South Korea, 8,000 tons of fresh warrant cancellations in LME copper warehouses signalled that inventory is likely to be shipped out soon.

Meanwhile, the discount to import copper into China also tightened, suggesting improving appetite.

The withdrawal “outweighed the impact of contracting manufacturing activity in China,” ANZ analysts said in a note.

“Market sentiment was bolstered by retreating SHFE copper inventories, which boosted confidence of improving demand in the second half of 2024,” ANZ added, referring to a slight fall in SHFE copper inventories in the last two weeks.

In China, while an official survey showed manufacturing activity fell for a second month in June, a private survey covering smaller, export-oriented firms showed factory activity grew at the fastest pace in more than three years.

London copper eases on high inventory pressure

Analysts have said physical copper demand in China has been picking up and will likely improve further in July, after prices dropped around $1,500 a ton since hitting a record high in May and stabilised around the current level for the past two weeks.

Market participants are awaiting China’s July 15-18 plenum to see if there will be more stimulus measures that could boost metals demand.

LME aluminium increased 0.2% to $2,521.50 a ton, nickel rose 0.3% to $17,415, zinc increased 0.4% to $2,939.50, lead advanced 0.3% to $2,224 and tin edged up 0.2% at $32,960.

SHFE aluminium edged up 0.5% at 20,395 yuan a ton, nickel jumped 1.3% to 138,020 yuan, lead climbed 0.8% to 19,740 yuan, while zinc eased 0.1% to 24,450 yuan and tin dipped 0.1% to 274,080 yuan.