Copper cooled after briefly touching its highest since late-March in London, as traders weighed the outlook for supply and demand in top market China.
The wiring metal gained 3% in August, and has posted a decent start to September, surfacing above $10,000 a ton in intraday trading on Tuesday and Wednesday. Analysts say a weak dollar and the prospect of US interest rate cuts have lent support, but there’s also a focus on the state of the Chinese market.
The more optimistic observers point to higher premiums for imports into China, relatively low inventories for this time of year, and the possibility of some domestic supply constraints. There’s a significant amount of smelter maintenance planned for September, according to Jia Zheng, head of trading at Shanghai Soochow Jiuying Investment Management Co.
“With reduced supply and stable demand, inventory levels are expected to decrease, which will support upward price moves,” Jia said by text message.
Copper on the LME is up about 14% for the year, and has made a solid recovery from a deep following President Donald Trump’s launch of his global tariff offensive in early April. A massive flow to the US ahead of levies has subtracted from supplies elsewhere, but US futures remain at a premium over LME prices.
Demand in China had a strong first half, although forecasters including Goldman Sachs Group Inc. have predicted softer conditions for the rest of the year. The nation’s official factory gauge for August showed a rapid contraction due to weak demand.
Copper rose as much as 0.6% to $10,038 a ton, before trading 0.1% lower to $9,967 by 11:22 a.m. Shanghai time. Aluminum and zinc were also flat-to-lower after earlier gains.
