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Copper prices climbed on Tuesday as supply concerns fuelled by mine closures and falling inventories in warehouses approved by the London Metal Exchange (LME) triggered buying.
Benchmark copper CMCU3 on the LME traded 0.5% up at $8,525.5 a metric ton in official rings. Prices of the metal used in the power and construction industries this month touched 4-1/2-month highs of $8,640 a ton. Traders said volumes were subdued.
Analysts are cutting estimates of surpluses for next year or forecasting deficits, partly owing to uncertainty over supplies from First Quantum’s FM.TO Cobre mine in Panama. Cobre accounted for 1% of global mined supply last year.
“There are a few micro issues going on in copper,” said Marex strategist Alastair Munro, pointing to Cobre Panama along with reduced production guidance from Anglo American AAL.L and inventory data.
“Most of the flows in the metals space are from CTAs,” he added, referring to funds that use trends to generate buy and sell signals from numerical models.
Anglo American has reduced its copper production guidance for the next two years by 20% and 18% respectively.
Copper stocks in LME warehouses MCUSTX-TOTAL have risen 8% to 168,650 metric tons since Dec. 6, but cancelled warrants — metal earmarked for delivery — at 21% suggest more copper is likely to leave the LME system.
Elsewhere, LME aluminium inventories rose again. At 511,450 tons they have risen 15% over the past couple of days and are weighing on prices of the metal used in the transport, packaging and construction industries.
Aluminium was down 0.5% at $2,272 a ton.
Traders expect further aluminium deliveries to the LME system after the British government imposed sanctions on imports of primary Russian metal.
Overall, metals were supported by a softer U.S. currency, making dollar-priced commodities cheaper for holders of other currencies.
In other metals, zinc CMZN3 gained 0.6% to $2,554 a ton, lead CMPB3 firmed by 0.1% to $2,061, tin CMSN3 added 0.5% to $24,950 and nickel CMNI3 was up 1.2% at $16,700.