LONDON: Copper rose on Tuesday as the dollar weakened, making metals cheaper for buyers outside the United States, but the slow progress of US stimulus measures and concerns about Chinese demand capped gains.
China, whose copper consumption lifted prices to eight-year highs earlier this month, is gearing up for a week-long New Year holiday in February while battling a coronavirus outbreak and tightening liquidity in the lending market.
Benchmark copper on the London Metal Exchange (LME) was up 0.3% at $7,990.50 a tonne at 1731 GMT.
The metal used in power and construction has hovered around $8,000 since slipping from a high of $8,238 on Jan. 8.
“Some market players may be taking profits or waiting for new impetus,” said Commerzbank analyst Daniel Briesemann, adding that Chinese demand typically rises after its New Year celebrations and this could lift prices.
But China’s demand overall will weaken in 2021 because it imported more copper last year than it needed, he said, predicting prices around $7,000-$7,500 by the year-end.
Stock markets were mixed as concerns about the delivery of a $1.9 trillion US stimulus package weighed on sentiment. The dollar weakened, making metals cheaper for buyers outside the United States.
China’s blue-chip stock index suffered its biggest daily loss since September as short-term borrowing rates jumped to pre-COVID levels.
COVID-19 outbreaks in northern China will not lead to manufacturing shutdowns, an official said.
The International Monetary Fund raised its forecast for global economic growth in 2021.
The world’s copper mines struggle to recover from COVID-19, writes columnist Andy Home.
TIN: Benchmark tin was up 1.7% at $22,840 a tonne after reaching $22,900, its highest since 2014. Tin is in its 13th straight week of gains as stockpiles in LME-registered warehouses near record lows.
LME aluminium was 0.4% higher at $2,020 a tonne as the premium for cash metal over the three-month contract rose to $8, the most since December 2019, pointing to tight nearby supply.
Zinc was down 2% at $2,652.50 a tonne after inventories in LME-registered warehouses leaped 24% to 235,025 tonnes, the most since September 2018.
Nickel was down 0.9% at $18,080 a tonne and lead was 1.3% higher at $2,074.