Copper rose as outflows into US stocks provided support

Copper prices rose to their highest level in more than a week on Tuesday, supported by US inventory outflows, although a weaker demand outlook from top metals consumer China limited the gains.

Benchmark copper on the London Metal Exchange rose 0.6% to $10,833.50 a metric ton at 0948 GMT after hitting $10,884.50, its highest since Nov. 14.

Copper stocks in LME-listed warehouses (MCUSTX-TOTAL) are down 42% so far this year amid outflows into Comex copper stocks (HG-STX-COMEX), which have continued to rise after hitting record highs in recent days.

This activity caused the three-month forward LME cash copper contract premium (CMCU0-3) to increase to $25 per tonne on Monday, the highest since mid-October. The final premium was at $10 on Tuesday.

“There is ongoing pressure driven by outflows into Comex copper stocks as people worry about potential tariffs on US imports,” said Dan Smith, managing director of Commodity Market Analytics. “This creates artificial tightness, thereby encouraging LME copper to do its own thing now.”

Meanwhile, weak fixed asset investment data in China in January-October suggests broader economic weakness, which could add pressure to industrial metals prices in the months ahead, Smith added.

The Yangshan (SMM-CUYP-CN) premium, an indicator of China’s appetite for copper imports, fell 6% on Tuesday and returned to $32, a four-month low reached a week ago.

From a technical perspective, the LME benchmark copper broke above resistance coming from the 21-day moving average, which now supports it at $10,828.

The metal, which is used in power generation and construction, hit a record high of $11,200 a tonne less than a month ago due to concerns about reduced copper supplies from Indonesia’s Grasberg mine this year and next.

In other LME metals, aluminum and zinc rose 0.1% to $2,812.50 a tonne and $3,002.50 respectively. Lead fell 0.1% to $1,982, while tin added 0.2% to $37,385 and nickel lost 0.2% to $14,670.
Source: Reuters