LONDON: Copper prices rose more than 3% on Thursday as the US Federal Reserve’s upbeat reading of the world’s largest economy stoked risk appetite.
Benchmark three-month copper on the London Metal Exchange (LME) had jumped 3.2% to $9,496 per tonne by 1135 GMT, on track for its biggest daily rise since October.
“The rising US interest rates next year are a signal that the economy is in good shape and the Fed is giving impression that everything is under control,” said Daniel Briesemann, analyst at Commerzbank.
The Fed said the US economy would remain resilient despite the spread of the Omicron coronavirus variant and pointed to low unemployment figures as it paved the way for three quarter-percentage-point interest rate hikes by the end of 2022.
Rising inventories and dollar strength weigh on copper
The news boosted global stocks and commodities as the dollar eased.
Peru Supply: MMG Ltd said it would be unable to continue production at its Las Bambas copper mine in Peru. The mine accounts for 2% of global copper supply.
Zinc miner Nexa Resources on Tuesday said it halted output in Peru due to a road blockade.
Inventories: Copper stocks in LME-registered warehouses climbed to 89,475 tonnes and are now down 6% so far this year. Meanwhile, LME cash copper was at a $22 a tonne premium over the three-month contract.
Outlook: BMO Capital Markets warned that current copper price levels were “elevated relative to fundamentals, particularly as demand wanes”, but said the metal was its top pick in the longer term due to “its perennially disappointing supply side and strategic role in global decarbonisation”.
Other Metals: LME aluminium rose 1.5% to $2,635 a tonne, zinc added 2.5% to $3,252, lead climbed 1.6% to $2,321, tin advanced 1.4% to $38,500 while nickel was up 2.1% to $19,525.
Source: Brecorder
