LONDON: Copper prices rose on Tuesday to their highest level in over two weeks as relief dominated the mood after the extension of the US-China tariff truce with optimism buoyed by a lower dollar following the release of US inflation data.
Benchmark copper on the London Metal Exchange was up 1.3% at $9,858 a metric ton at 1614 GMT from a $9,864 a ton earlier, its highest level since July 25.
The 90-day extension of the tariff truce between the world’s two largest economies has eased concerns about trade friction and is expected to support demand ahead of the seasonal autumn import surge for goods such as electronics.
A moderate rise in US consumer prices, meanwhile, reinforced expectations the Federal Reserve will cut interest rates next month, weakening the US currency and potentially boosting demand for dollar-priced metals.
“Focus will remain on US macroeconomic releases, with particular attention to any indications of weakness following the recent sharp downward revision to employment figures,” Benchmark Mineral Intelligence said in a note.
Weighing on copper prices are rising stocks in LME-approved warehouses, which at 155,000 metric tons are up more than 70% since late June.
Higher inventories have also eased worries about copper availability on the LME market and widened the discount between the LME cash copper contract and the three-month forward to $84 a ton, its highest since February.
Another potential negative for prices are signs of softer demand in top consumer China. The Yangshan copper premium, a gauge of China’s appetite for importing the metal, was at $47 a ton, down from levels above $100 a ton in May.
Clues to demand prospects for industrial metals in China are expected to come from a spate of data due this week on loans, house prices, investment and industrial production.
Aluminium was up 1.6% at $2,629, zinc rose 1% to $2,850, lead climbed 0.9% to $2,016, tin gained 0.2% to $33,875 and nickel retreated 0.2% to $15,325 a ton.