Reduced stocks and robust China data propel copper to a three-month high.


On Friday, copper prices reached their highest level in three months, positioning themselves for the third consecutive week of growth. This surge can be attributed to several factors, including favorable data from the largest consumer, China, reduced exchange inventories, a weaker dollar, and restricted supply. Reduced stocks and robust China data propel copper to a three-month high.

At 10:59 GMT, three-month copper on the London Metal Exchange increased 0.9% to $8,543.5 per metric ton, surpassing the resistance at $8,445 that had been present since September 1. The price had previously peaked at $8,564.

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China’s manufacturing sector unexpectedly expanded in November due to rising orders, according to a private Caixin survey, despite the official purchasing managers’ index (PMI) for November falling.

“Although the official PMI data points to Chinese industry still contracting, the Caixin data at above 50 indicates that the stimulus that the Chinese government have been offering is working,” according to Nitesh Shah at WisdomTree.

The depreciation of the U.S. dollar bolstered copper and other metals priced in dollars, as investors assessed data indicating a decline in inflation and anticipated a speech by U.S. Federal Reserve Chair Jerome Powell later in the day.

The eurozone and the United States both reported weaker inflation figures, which bolstered expectations that central banks might cease increasing interest rates. As a result, traders placed bets on earlier rate reductions in the coming year.

“Copper prices will be supported in 2024 by a weaker U.S. dollar resulting from the U.S. Federal Reserve’s easing of monetary policy,” said Ewa Manthey, a commodities strategist at ING.

Copper concentrate’s expansion has been influenced, in part, by apprehensions regarding a restricted supply from Panama and indications of diminished availability.

This week, there was a 27% decline in copper inventories at warehouses monitored by the Shanghai Futures Exchange. Additionally, daily on-warrant stocks in warehouses registered with the LME decreased to their lowest level since September due to additional cancellations of warrants (0#MCUSTX-LOC-GRD>).

Aluminum decreased 0.2% to $2,188 per ton, zinc rose 0.2% to $2,479.5, lead rose 0.6% to $2,136, tin rose 1.6% to $23,615 per ton, and nickel gained 0.9% to $16,795.