Copper prices in London edged up on Tuesday, driven by a softer U.S. dollar and expectations of an interest rate reduction by the Federal Reserve a day later.
Three-month copper on the London Metal Exchange (LME) rose 0.1% to $9,395 per metric ton by 0406 GMT and nickel edged up 0.2% at $16,310.
LME aluminium eased 0.1% to $2,525, lead dipped 0.2% at $2,035 and tin fell 0.3% to $31,850 a ton, while zinc traded nearly flat at $2,945.
A weak dollar brought by aggressive rate cut hopes underpinned commodities, while copper also benefited from slowing inventory inflows and tight mine supply, said Sandeep Daga, a director at Metal Intelligence Centre.
The dollar traded near its one-year low on Tuesday, a day ahead of the expected start of an U.S. easing cycle that markets are betting may begin with an outsized rate cut.
A weaker dollar makes greenback-priced metals cheaper to holders of other currencies.
Copper inventories in SHFE warehouses fell to 185,520 tons on Friday, the lowest since Feb. 23.
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The fall in inventory points to a continued pick-up in pent-up demand after LME copper price surged to a record level above $11,000 a ton and amid growing tightness in scrap supply in China, said Benchmark Mineral Intelligence analysts in a note.
The premium to import copper into top consumer China was at $63 a ton on Friday, compared to a discount of $20 a ton in May.
“However, … exiting bears… are lifting prices while bulls are looking on. Open interest has been falling. This tells me that despite the latest rally, prices are likely to be range-bound,” Daga added.
The Chinese markets are closed for a public holiday.
Source: Brecorder
