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Copper prices rose on Monday as declining stocks in warehouses registered by the London Metal Exchange (LME) and rain-hit mining operations in Chile offset a strong dollar and concerns about global economic growth.
Benchmark copper on the LME was up 0.4% at $8,420 a metric ton in official open-outcry trading after the metal used in power and construction fell 2% last week.
All other base metals were down as macroeconomic data continued to disappoint, with a slump in German manufacturing to a 37-month low in June while S&P has cut its forecast for economic growth in China this year.
Official PMIs from China, due this week, should provide some insight into demand outlook from the world’s biggest metals consumer.
“We are seeing a resumption of metal price weakness,” said SP Angel metals associate Arthur Parish, citing receding hopes of more substantial economic stimulus in China. “This is being led by the steel sector, with coking coal and coke heading to yearly lows.”
The premium for LME cash over the three-month copper contract jumped to a seven-month peak after a decline in stocks available to the market.
Codelco, the world’s largest copper producer, halted some mining operations in Chile due to heavy rain last week, ING analysts said.
On the technical front, copper is squeezed between 50-day and 21-day moving averages, with the 200-day moving average coming in between them at $8,417.
The dollar retreated slightly on Monday but remains strong after a more than 0.5% gain last week. A strong U.S. currency makes dollar-priced metals less attractive for buyers holding other currencies.
In other metals, LME aluminium CMAL3 fell 0.9% to $2,154.50 a metric tonne in official activity while tin CMSN3 tumbled by 4.3% to $25,350, zinc CMZN3 lost 0.8% to $2,345 while lead CMPB3 was down 1.2% at $2,097 and nickel CMNI3 slid 2.6% to $20,750.