LONDON: Copper prices drifted higher on Wednesday, still basking in the glow of stimulus measures unleashed by top metals consumer China amid hopes that more support is on its way.
Three-month copper on the London Metal Exchange (LME) rose 0.4% to $10,023 per metric ton in official open-outcry trading.
LME copper has gained 7% since US interest rates were cut on Sept. 18, which was followed by several announcements by China of new stimulus programmes. “The Chinese government might follow through with more fiscal stimulus and there’s a lot of anticipation,” said Nitesh Shah, commodity strategist at WisdomTree.
“I expect that a lot of what they’ll do is doubling down on current energy transition strategies, such as EVs and solar panels, which are very beneficial to the base metals complex.” China accounts for about half of the world’s metals consumption.
Trading volumes on Wednesday were thin as China and India, one of Asia’s fastest growing metals markets, were closed for holidays. Higher metals prices could also deter physical demand. Rising oil prices, which jumped more than 2% on conflict in the Middle East, also supported metals because that boosts the cost of mining and processing minerals.
“Up is the path of least resistance at the moment. Technicals support it, and sentiment does too. And, if Iran and Israel go to a full-scale war, that would give metals a push up too,” said a broker. The premium of the LME October aluminium contract over November rose to $18 a ton, which is known as backwardation and usually is a sign of tight near-term supply.
LME aluminium fell 0.5% in official activity to $2,634, nickel climbed 1.5% to $17,980, zinc rose 0.2% to $3,151.50, lead advanced 1.4% to $2,137 while tin added 1.2% to $34,275.
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