LONDON: Copper prices rose in London on Friday, but were heading for their biggest weekly drop in five months due to concerns over sustained high interest rates, firm dollar and high inventories.

Metals consumers, producers, traders and brokers will gather in London for the annual LME Week and markets in top metals consumer China will reopen after a week-long public holiday next week.

Three-month copper on the London Metal Exchange was up 0.9% at $7,971 per metric ton by 1102 GMT. It is heading for a 3.6% weekly decline, its worst weekly performance since May.

Used in power and construction, copper has been hit by weaker than originally expected demand growth in China and macro headwinds in 2023. However, it is widely expected to benefit from its role in the green energy transition in the long-term.

Copper set for 4th straight fall on high inventory, firm dollar

As to all base metals, “production cost support and longer-term dip-buying are likely to buffer against more meaningful declines, unless we see a severe global demand shock,” Citi said in a note.

Recent actual demand for copper and aluminium in China is quite robust due to the home appliance, electric vehicle, solar and wind sectors and despite the country’s property sector crisis.

The decline in metals this week was also driven by computer-driven Commodity Trading Advisor (CTA) funds’ sell programmes, Al Munro at broker Marex said in a note.

A crucial U.S. employment report due later on Friday could become an important waypoint for Federal Reserve officials deciding whether to push ahead with another interest rate increase this year.

Adding further pressure on the copper prices, inventories in the LME-registered warehouses remain at highest since May 2022 of 170,175 tons.

LME aluminium rose 0.3% to $2,239.5 a ton, zinc gained 1.2% to $2,506, lead was up 0.6% at $2,148, tin increased 1.2% to $24,425 and nickel added 0.1% to $18,500.