Copper rises with signs of improving demand from China

LONDON: Copper prices rose on Friday on signs of improving demand from top metals consumer China, where buyers are looking to build up their inventory ahead of a long national holiday.

Benchmark three-month copper on the London Metal Exchange was up 0.4% at $9,980 a ton by 1601 GMT.

The metal is down 2% since hitting $10,192.50, a 15-month high on Monday, as traders booked profits following the U.S. Federal Reserve’s rate cut on Wednesday.

The Yangshan copper premium which reflects demand for copper imported into China, rose 1.8% to $57 a ton on Friday.

Copper consumers in China purchase the metal for restocking in the run-up to the public holiday, which runs from October 1 to October 8 this year and usually slows overall activity.

Copper is likely to trade between $9,500 and $10,500 a ton in the fourth quarter, before climbing to touch $12,000 in 2026 due to the prospect of a weaker dollar and rising metal production being unable to offset higher demand, Citi said in a research note.

Copper hits one-week low ahead of the US Fed rates decision

Citi expects refined copper consumption to rise 2.9% next year to 27.5 million tons, prompting the global market to swing to a deficit of 308,000 tons from this year’s 63,000-ton surplus.

Among other LME metals, aluminium fell 0.5% to $2,671 a ton.

It hit a six-month high of $2,720 on Tuesday, when the premium of the cash aluminium contract against the three-month contract widened to $16 a ton, the highest since March. The premium was last at $5 a ton.

“Physical market conditions (for aluminium) remain broadly balanced on a global level, with large positioning on the LME market adding temporary volatility in nearby spreads but with limited impact on flat price,” Citi said, expecting fourth-quarter prices to average $2,650.

LME zinc dipped 1.1% to $2,885.50 a ton. Zinc inventories in the LME-registered warehouses have slumped in recent months, suggesting a tight market for the metal used to galvanise steel, though industry sources say supplies on the physical market are ample.

Lead lost 0.4% to $1,997, tin gained 1.2% to $34,130, while nickel slipped 0.1% to $15,260.