Copper rebounds from two-month low on weaker dollar

Copper prices rose after touching more than two-month lows on Thursday as support from a weaker dollar offset pressure from rising inventories and lacklustre demand in top metals consumer China.

Three-month copper CMCU3 on the London Metal Exchange was up 0.2% at $9,562 a metric ton in official open-outcry trading after hitting an intra-day low of $9,485.50 for its weakest since April 17.

The dollar index was down almost 0.3%. A weaker U.S. currency makes dollar-priced commodities more attractive for buyers using other currencies. Spot gold prices rose 1%.

Meanwhile, copper stocks registered with the world’s big three exchanges have risen above 500,000 metric tons for the first time since August 2021. LME inventories have surged by 72% since mid-May to 177,750 tons, the highest in more than six months.

“The rise in total exchange copper stocks to over 500,000 ton is not something the market likes when it’s already under pressure from long liquidation,” said Ole Hansen, head of commodity strategy at Saxo Bank.

After rallying to a record high of $11,104.50 on May 20, copper prices have fallen 14% on sluggish economic data from China.

Adding to worries about weak physical copper demand in China was data on Thursday showing China’s industrial profit growth slowed sharply last month.

The most-traded August copper contract on the Shanghai Futures Exchange SCFcv1 eased 0.6% to 77,550 yuan ($10,669.18) a ton.

“Inventory levels of copper continue to surge in China, while local premiums remain low, signalling little sign of physical demand to back to euphoric positioning in the West,” TD Securities analysts said in a note dated Wednesday.

In other metals, LME aluminium CMAL3 dipped 0.4% to $2,502 a ton in official activity, zinc CMZN3 was down 0.3% at $2,933, lead CMPB3 lost 0.4% to $2,187 while nickel CMNI3 gained 0.4% to $17,125 and tin CMSN3 rose 0.7% to $32,225.
Source: Reuters (Reporting by Eric Onstad, Additional reporting by Ashitha Shivaprasad in Bengaluru and Polina Devitt in London, Editing by David Goodman)