Copper set for annual gain on Chinese demand, low stocks

Beijing — Copper prices were on track to record a gain for the year on Friday thanks to low global stocks and solid demand from top consumer China. The prospect of US interest rate cuts also brightened the outlook for the metal.

Three-month copper on the London Metal Exchange (LME) edged up 0.3% up to $8,652.50 a tonne by 8.18am GMT. The contract has gained 3.3% this year, partly reversing a decrease of 13.9% in 2022.

China’s copper demand climbed 3.2% this year after the country dropped its zero-Covid policy, according to analysts at brokerage China Futures. Annual demand is likely to slow to 2.8% in 2024, as the housing sector remains sluggish, though that will be partly offset by increasing investment in the power grid and strong solar and wind power sectors, they added.

Copper is widely used in power, construction and transportation sectors.

The dollar index dipped on expectations the Federal Reserve will cut interest rates from March next year. That bodes well for copper demand because the metal is priced in dollars.

The market was also underpinned by low inventories and the prospect of tighter supplies of copper concentrate.

Deliverable copper stocks on the Shanghai Futures Exchange (SHFE) stood at 30,905 tonnes on Friday, down by more than half from a year earlier.

China’s top smelters on Thursday lowered their first-quarter guidance for copper charges as mine closures and disruptions sparked concern about raw material supplies.

The most-traded February copper contract on the SHFE slid 0.8% to 68,920 yuan ($9,721.01) a tonne ton. It has risen 6.9% in the year.

LME aluminium gained 0.3% to $2,384 a tonne, tin was down 0.5% to $25,550, zinc added 0.6% to $2,656.50, lead slipped 0.3% to $2,081, and nickel fell 1.6% to $16,460.

SHFE aluminium slid 0.2% to 19,505 yuan a tonne, nickel lost 3.9% to 125,210 yuan, and tin slipped 1.2% at 212,100 yuan, while zinc moved 0.3% up to 21,545 yuan, lead was unmoved at 15,875 yuan.

Reuters