London copper advanced on Monday, as a private sector survey showed strong factory activity in top consumer China, and stabilising US inflation suggested the Federal Reserve’s interest rate cut plans later this year remained intact.
Three-month copper on the London Metal Exchange rose 0.4% to $10,075 per metric ton by 0425 GMT, while the most-traded July copper contract on the Shanghai Futures Exchange eased 0.9% to 81,510 yuan ($11,249.74) a ton.
China’s manufacturing activity in May grew at the fastest pace in about two years, with strong production and new orders across smaller, export-oriented firms, a private sector survey showed, contrasting a surprise fall in the broader official purchasing managers’ index.
The manufacturing sector consumes a large amount of metals.
A softer dollar also made greenback-priced metals cheaper to holders of other currencies.
Data released last week showed that US inflation stabilised in April, keeping the door open for the Fed to cut rates later in the year.
The discount to import copper into China tightened to $10 a ton on Friday, from $20 on May 22, indicating some improvement in physical demand.
However, overall consumption remained tepid due to high and volatile prices. Copper prices are at risk of a correction in the short term, as spot demand failed to catch up with bullish macroeconomic indicators, Jinrui Futures said in a note.
Copper rebounds after US inflation data pushes dollar down
However, the fall in copper price is expected to be limited due to raw material supply tightness, it added.
LME aluminium eased 0.4% to $2,642.50 a ton, nickel edged down 0.2% at $19,675, zinc fell 0.2% to $2,965, lead increased 0.4% to $2,282.50, while tin shed 0.9% to $32,750.
SHFE aluminium dropped 1.6% to 21,100 yuan a ton, nickel eased 1.6% to 148,060 yuan, zinc declined 2.1% to 24,255 yuan, tin decreased 2% to 268,280 yuan, while lead rose 0.2% to 18,805 yuan.
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