Copper prices rose on Monday as a weaker dollar made greenback-priced metals cheaper for holders of other currencies, while supply risks in China supported aluminum.
Three-month copper on the London Metal Exchange rose 0.5 percent to $7,894.50 a ton, aluminum edged up 0.5 percent to $2,296.50 a ton. Zinc advanced 1.2 percent to $3,206.50 a ton and lead CMPB3 increased 1 percent to $1,936 a ton.
The dollar idled not far from a two-week low against a basket of peers ahead of key US inflation data this week that might give the Federal Reserve room to slow the pace of rate hikes at its Sept. 21 policy meeting.
Trading volume was tepid on Monday, as the Shanghai Futures Exchange is closed for a public holiday.
The premium of LME cash copper over the three-month contract fell to $67.50 a ton, from $108.50 a ton in the previous session, as some tonnage was delivered into LME warehouses and eased worries over shortage of immediate supply.
Supply risks of copper concentrate continued to linger after workers at Chile’s Escondida, the world’s largest copper mine, agreed to temporarily suspend a work stoppage planned for next week to meet with local regulators.
Meanwhile, a reduction in aluminum output in China added to existing supply risks caused by smelter closures in Europe on surging energy prices, but price gains were limited due to weak demand.
“Some aluminum smelters in Yunnan province, which accounts for over 12 percent of China’s production, may start reducing operating rates by 20-30percent this month amid a drought-induced shortage of hydropower,” wrote ANZ analysts in a report.
“We estimate that approximately 1 percent of aluminum supply and 5 percent of zinc output is at risk of closure in Europe,” the report added.
