Fund buying, supply shortage outlook pushes copper higher

Copper prices edged higher on Thursday, as the metals market saw an extended inflow of money through investment funds, while a forecast of potential deficit in the refined copper market this year also lent support.

Three-month copper on the London Metal Exchange (LME) CMCU3 was up 0.9% at $9,862 per metric ton, as of 0725 GMT, while the most-traded June copper contract on the Shanghai Futures Exchange (SHFE) SCFcv1 closed up 1.9% at 80,160 yuan ($11,061.13) a ton.

“Fund buying was still relentless during the U.S. session … and after a slightly weaker opening, Asian funds seem to be follow through too on this wave of buying,” said a trader.

A slightly weaker dollar index .DXY helped make greenback-priced metals cheaper to holders of other currencies.

Analysts in Goldman Sachs forecast the global refined copper market is likely to see a deficit of 428,000 tons in 2024 and expect copper prices in London to hit $12,000 a ton within the next 12 months.

LME copper has gained 11% so far this month and around 15% year-to-date. Earlier this month, it hit $9,988 a ton, a two-year high.

However, in China, the Yangshan premium assessed by SMM SMM-CUYP-CN has dropped to zero for the first time on record, indicating weak appetite to import copper into China, following a surge in prices.

LME aluminium CMAL3 dropped 0.7% to $2,586 a ton, nickel CMNI3 was flat at $18,945, zinc CMZN3 rose 1% to $2,833.50, lead CMPB3 edged up 0.7% at $2,212, and tin CMSN3 advanced 0.5% to $32,000.

LME aluminium inventories MALSTX-TOTAL were at 496,550 tons, the lowest since Dec. 14 last year, following a surge in warrant cancellations.

SHFE aluminium SAFcv1 rose 1.7% to 20,485 yuan a ton, nickel SNIcv1 advanced 1.7% to 143,820 yuan, zinc SZNcv1 edged up 1.4% at 22,770 yuan, lead SPBcv1 was up 1% at 17,175 yuan and tin SSNcv1 increased 2.3% to 260,010 yuan.
Source: Reuters (Reporting by Mai Nguyen in Hanoi; Editing by Sherry Jacob-Phillips, Rashmi Aich and Mrigank Dhaniwala)