Copper prices hit three-month peaks on Thursday, boosted by a lower dollar, expectations of stronger demand from top consumer China, falling stocks and a break of a major technical level. Benchmark copper on the London Metal Exchange ended up one percent at $5,940 a tonne after touching $5,963.5, its highest since the end of March.
"Our expectation is the dollar will generally be weak," Oxford Economics commodities analyst Dan Smith said. "We are relatively upbeat about our view on China and that will support copper against a backdrop of relatively tight supply conditions. Electricity consumption in China is strong, normally a good indication of copper demand."
DOLLAR: A lower US currency makes dollar-denominated industrial metals cheaper for non-US firms, which could potentially boost demand. China accounts for nearly half of global copper demand, estimated at about 23 million tonnes this year. Its power consumption rose 6.0 percent in April from a year earlier.
Industrial metals markets will be watching manufacturing, investment, property market and loans data for clues on the strength of its copper demand over coming months. Copper stocks in LME warehouses are down more than 30 percent since early May to 243,300 tonnes. Stocks monitored by the Shanghai Futures Exchange have fallen more than 40 percent since early April to near 185,000 tonnes.
Traders said copper's break above the 200-week moving average at $5,865 had triggered a reversal of bets on lower prices, but that $6,000 would be a major upside barrier. Prices climbed one percent to $1,915 a tonne from $1,917.50 a tonne, its highest since June 8, on expectations of lower supplies from top producer China, which is cracking down on polluting industries.
This week China appointed a new environment minister who has promised a "protracted battle" to clean up the nation's notoriously polluted air, water and soil. LME lead added 0.8 percent to $2,314 a tonne from a 3-month high of $2,322.50. The battery metal has been boosted by shrinking mine supply and rising Chinese imports.
Traders are keeping an eye on large holdings of warrants and cash contracts in copper, aluminium, nickel, tin and lead, which could mean tight supplies on the LME market. Zinc was up 0.8 percent at $2,755.5 a tonne, tin rose 3.1 percent to $20,050 and nickel gained 0.2 percent to $9,290.