LONDON- Copper prices climbed on Friday on track for their largest weekly gain in eleven months, helped by falling inventory and expectations of more economic support from top consumer China.
Three-month copper on the London Metal Exchange had gained 2.1 percent to $8,488 a metric ton. Prices of the metal used in the power and construction industries are up 3.9 percent so far this week, the highest weekly rise since March last year.
Earlier in the session it hit a two-week high of $8,495.5,breaking through major technical barriers including 21-day, 50-day and 200-day moving averages, in what traders said was subdued trade due to China’s Lunar New Year holiday.
Further support from China’s government could come in varying forms, including measures to boost consumption, which could be positive for its base metals demand, said SEB chief commodity analyst Bjarne Schieldrop.
Last year’s clampdown on private sectors, and other measures that had a negative impact on consumer confidence, could be reversed as the Chinese government prioritizes economic stability, Schieldrop said.
“Overall, fundamentals of copper are still solid,” he added.
However dollar strength capped gains for industrial metals prices, particularly after US producer prices affirmed expectations that the US Federal Reserve would delay interest rate cuts until the middle of 2024 or later.
A stronger US currency makes dollar-priced metals more expensive for holders of other currencies.
Copper inventories in LME registered warehouses at 130,675 ton are at their lowest in six months.
Falling stocks have helped narrow the discount for the cash copper contract against the three-month contract. It was last at $88 a ton, down from a record high of $113.3 on Feb. 9. – Reuters
