LONDON: Copper prices jumped on Wednesday on low inventories, healthy risk appetite and a brighter technical outlook.
Three-month copper on the London Metal Exchange gained 0.9% to $9,585 a tonne in official open-outcry trading, having lost about 8% since Oct. 18.
“We’ve had a very deep correction from the run-up in October and now it looks like we’re finally finding a plateau from where the market will stabilise,” said Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen.
“Risk appetite seen through the stock market remains pretty robust and the technical picture has improved with that bounce we’ve seen from the lows earlier this week.”
Global stock markets traded at fresh record-highs on Wednesday ahead of a likely U.S central bank announcement that it will start cutting pandemic-era monetary stimulus.
An arbitrage window has also opened up for copper between the LME and China, spurring Chinese buying, Hansen added.
China demand fears push copper to two-week low
The most-traded December copper contract on the Shanghai Futures Exchange closed up 2% at 71,350 yuan ($11,151.23) a tonne, following two straight weeks of declines.
“Inventories are still dwindling, so this downwards flat price momentum too has its limits,” a Singapore-based metals trader said.
On-warrant LME copper inventories rebounded by 19% to 37,525 tonnes, daily LME data showed on Wednesday, but they are still down 84% since late August.
The LME cash copper premium over the three-month contract was at $275 a tonne, indicating tight nearby supplies.
A rural community in Peru will likely lift its blockade of the country’s largest copper mine Antamina on Wednesday after protests forced miners to suspend operations, the Peruvian Ministry of Energy and Mines said in a tweet.
LME cash nickel was last at a $110-a-tonne premium over the three-month contract, suggesting tightness in nearby supplies, as inventories fell to their lowest since December 2019 at 139,878 tonnes.
LME aluminium advanced 1.1% in official activity to $2,722 a tonne, nickel rose 0.5% to $19,690, lead added 1.1% to $2,388, tin climbed 1% to $37,000, but zinc slipped 0.5% to $3,325.