Copper prices edged higher on Friday, supported by a weaker dollar and supply issues, although gains remained modest due to concerns about elevated oil prices impacting demand. Benchmark three-month copper on the London Metal Exchange rose 0.5% to $14,319 a metric ton in official open-outcry trading. The gain marked a decline of 2% since the end of the previous week.
Neil Welsh, head of metals at broker Britannia Global Markets, noted that metals have seen light turnover with copper finding support from a slightly softer dollar, but cautioned that the broader tone remains cautious. Welsh highlighted that high energy costs stemming from the ongoing US-Iran conflict and signs of industrial weakness in China have weighed on sentiment across the complex. The dollar index hit its strongest level in 17 months earlier in the week but weakened on Friday, making commodities priced in the US currency cheaper for buyers using other currencies.
LME copper has gained 16% over the past six months, largely due to a significant shift in inventories to the United States attracted by the prospect of tariffs, creating shortages elsewhere. Stocks in warehouses monitored by the Shanghai Futures Exchange have declined sharply by 79% over the past four months to 38,744 tons, their lowest level since January 2024. The Shanghai Futures Exchange was closed for China's National Day and will reopen on October 8.
Supply concerns have also been underpinned by the prospect of reduced output from Chile, the world's largest copper producer. Production data released on Wednesday showed a decline of 12.8% year-on-year in August. Adding to supply anxieties, supervisors at Chile's Escondida copper mine, the world's largest, rejected a collective contract offer, paving the way for a potential strike.
Daniel Hynes, senior commodity strategist at ANZ, commented that the production challenges add to an overall slump in output, as the industry struggles to maintain aging infrastructure amid difficult operating conditions. Other metals on the LME showed mixed performance. Aluminium dipped 0.1% in official activity to $3,121.50 a ton, while nickel shed 0.1% to $15,620.
Zinc rose 0.2% to $3,732.50, lead ticked 0.3% higher to $1,863, and tin was little changed at $54,350. Source: Asharq Al Awsat, Reuters
Source: english.aawsat.com