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Copper climbed towards one-month highs on Tuesday as improving demand prospects due to stronger than expected data from the United States and top consumer China were reinforced by a lower dollar.
Benchmark copper CMCU3 on the London Metal Exchange was up 0.3% at $8,011 a tonne at 1000 GMT. Prices rose to $8,020 on Monday, the highest since July 5.
“In the near term better data means equity and credit markets are pricing out a more severe recession risk. In this context base metals could catch up with this risk positive shift,” said Giles Coghlan, analyst at broker HYCM. .EU
Stronger data includes China’s copper imports rising to 463,693 tonnes in July, up 9.3% from a year earlier as the sharp drop in prices triggered buying.
It also includes U.S. jobs growth which accelerated unexpectedly in July, boosting expectations of another 75 basis point rate hike in September when the Federal Reserve next meets. U.S. consumer prices data on Wednesday will yield further clues to the direction of U.S. monetary policy.
Another U.S. rate hike could boost the dollar but for now it is retreating, making dollar-denominated metals cheaper for holders of other currencies, which could boost demand. FRX/
Low copper stocks in LME registered warehouses are also supporting prices as are cancelled warrants — metal earmarked for delivery — at 28% compared with 18% at the start of August.
Rising concern about copper availability on the LME market can be seen in the price difference between the cash over the three-month contract last at zero compared with an $8 per tonne discount on Friday.
LME aluminium stocks at 32-year lows of 284,275 tonnes are also helping to buoy prices, which were last up 1.6% at $2,484. Cancelled warrants at 45% suggest more metal is due to be delivered out.
The premium for the cash over the three-month aluminium contract CMAL0-3 is trading at around $9 per tonne compared with levels near zero early last week.
Zinc CMZN3 was up 1.1% at $3,482 a tonne, lead CMPB3 added 0.7% to $2,178, tin CMSN3 fell 1.7% to $23,895 and nickel CMNI3 slipped 1% to $21,460.