Copper hovered just below a two-week high on Thursday, supported by a fall in inventories and a softer dollar, though lower imports into China last month kept prices in check. Inventories in London Metal Exchange warehouses fell for the first time in three weeks, signalling returning demand after the slower summer months. LME copper stocks fell 1,375 tonnes to 339,600 tonnes, the latest data showed, but remained around the highest in almost a year.
London Metal Exchange copper closed up 0.3 percent at $4,664 a tonne, after nudging to its highest in two weeks to $4,688.50. "All metals have been buoyed by the softer dollar, while a low interest rate mantra keeps lending support," Societe Generale analyst Robin Bhar said. The dollar slightly recovered from a near two-week low against the euro, hit as the European Central Bank on Thursday left interest rates unchanged and maintained the key parameters of its 1.74 trillion euro ($1.95 trillion) asset buying programme.
"Copper and aluminium are still burdened by oversupply, some of the smaller metals like zinc and nickel have supply constraints, and I expect continued gains there," Bhar said. China's imports unexpectedly rose in August for the first time in nearly two years, boosted by coal and other commodities, suggesting domestic demand may be picking up. However, China's imports of copper fell 2.8 percent from a month ago to 350,000 tonnes in August, the lowest in one year.
"We do not think this reflects dwindling domestic demand," Capital Economics said in a note. "Instead, we think it is a reflection of the rapid expansion in domestic copper refining. Indeed, growth in copper ore imports has been particularly strong this year." Aluminium closed at $1,590 a tonne, down 0.2 percent. Best-performing nickel rose to its highest in three weeks at $10,370 a tonne, and was up 1.3 percent at $10,340 at close, while tin closed up 0.1 percent at $19,575 a tonne, trading $95 shy of its highest since January 2015 hit earlier this week.
The premium of nearby tin futures over the LME benchmark has spiked to the highest in almost a year after one investor amassed up to half of the remaining LME inventories. Three-month lead closed up 0.3 percent at $1,925 a tonne, while sister metal zinc fell 0.3 percent to $2,315 a tonne at close. Elsewhere, China's steel exports fell to the lowest in six months in August amid stronger domestic prices. Steel is typically a leading indicator for industrial metals demand and a pick up in local prices may herald further gains in nickel and zinc prices, used in stainless steel and galvanising respectively.