LONDON: Copper prices rose on Friday following the dollar’s retreat after earlier losses on shrinking factory activity in top consumer China for a fifth straight month fuelled uncertainty about the demand outlook for industrial metals.
Three-month copper on the London Metal Exchange (LME) (LME) was up 0.3% at $8,521 a metric ton at 1716 GMT. Weak US manufacturing data raised the prospect of US interest rate cuts, which weighed on the US currency making dollar-priced metals cheaper for holders of other currencies. China’s official manufacturing purchasing managers’ index (PMI) fell to 49.1 in February from 49.2 in January, with factories closed during the month for a holiday.
However, negative sentiment was tempered by the Caixin/S&P Global survey, which showed manufacturing activity of small-to-medium businesses expanded steadily as both production and new orders grew faster.
“Overall, China’s manufacturing sector still doesn’t look too healthy,” a metals trader said. China’s ailing property sector, a major consumer of industrial metals has weighed on the market for some time. This was reinforced recently by a liquidation petition filed against property developer Country Garden.
“Property and infrastructure sectors are still traditional pillars for metals demand, this activity will continue to decline, import demand of metals will continue to decline,” said Liberum analyst Tom Price.
Attention now falls on China’s major meeting next week, where growth targets and policy goals will be announced. Beijing is likely to maintain its support on the renewable energy sector but that may not be significant enough to create new demand for metals, Price added. Three-month nickel retreated on Friday after hitting a two-month high in the previous session. It was down 1.2% at $17,675.
More Indonesian production being turned into metal and being delivered to LME-registered warehouses is expected to weigh on the prices of the stainless steel ingredient. Latest data showed LME nickel inventories rose to 1,158 tons to 72,630 tonnes on Feb. 28, its highest since May 2022. They are up more than 13% since end-2023. In other metals, LME aluminium rose 0.4% to $2,237, zinc moved 0.3% lower to $2,418, lead dropped 1% to $2,049.5 while tin lost 0.6% to $26,400.
Source: Brecorder
