London copper edges up on soft dollar

Copper prices rose on Thursday on a weaker dollar, but poor economic data and softer physical demand at higher prices capped gains.

Three-month copper on the London Metal Exchange (LME) rose 0.1% to $9,877.50 per metric ton by 0820 GMT, after rising 2% in the previous session, the biggest daily gain since June 6.

Meanwhile, the most-traded August copper contract on the Shanghai Futures Exchange (SHFE) closed up 1% to 79,870 yuan ($10,984.58) a ton.

A softer dollar, weighed down by weak US economic data and expectations of rate cuts, made greenback-priced metals cheaper to holders of other currencies. However, prices gain were limited.

“Copper has limited upside as exchange inventories pile up and demand remains price-sensitive,” said Sandeep Daga, a director at Metal Intelligence Centre.

The downtrend in manufacturing and service sector PMI hints at a slowdown in the world’s top two economies, Daga added. LME copper inventory rose to 186,450 tons, the highest since October 2023.

Stockpiles in SHFE warehouses have eased slightly in recent weeks, but are still relatively high.

London copper eases on high inventory pressure

The US labour market was gradually slowing and the manufacturing sector was contracting, while Chinese manufacturing activity expansion was broadly declining in June.

However, Citi analysts said LME copper could test $10,00 a ton in the weeks ahead, citing hopes of Chinese policy easing in July and a Fed rate cut in September.

“The grid (in China) is an obvious focus for further investment to avoid bottlenecks for renewables additions. More property measures and monetary easing would also be copper-supportive,” they said in a note.

LME aluminium dipped 0.1% to $2,544.50 a ton, nickel eased 0.5% to $17,240, zinc rose 0.5% to $3,007, lead was nearly flat at $2,221.50, and tin shed 0.5% to $33,195.

SHFE aluminium eased 0.1% to 20,420 yuan a ton, nickel increased 0.2% to 137,590 yuan, zinc climbed 0.7% to 24,670 yuan, lead edged up 0.1% at 19,570 yuan and tin was up 0.3% at 274,260 yuan.