Copper supported by hopes interest rates may soon peak
LONDON — Copper prices rose on Monday, supported by rising imports of the industrial metal by top consumer China and on hopes that interest rates may peak soon after rapid increases aimed at curbing inflation.
Further advances came after the New York open when U.S. equities rose, traders said.
Benchmark copper on the London Metal Exchange (LME) was up 1.2% at $7,969 a tonne at 1604 GMT. Prices of the metal used as a gauge of economic health are up 14% since July 15, when they touched the lowest since November 2020 at $6,955.
“The bounce in metal prices and more broadly other risk assets comes from hopes that perhaps inflation has peaked or is possibly past its peak,” said Duncan Hobbs, research director at Concord Resources.
“By association it may mean central banks led by the Fed are at or even past the peak of hawkishness. Whether those hopes are justified is debatable; the latest U.S. jobs report was strong.”
U.S. job growth accelerated unexpectedly in July, lifting employment above its pre-pandemic level and pouring cold water on fears the economy was in recession.
Clues to U.S. policy will come on Wednesday with the release of consumer prices data.
Part of the reason for base metal price rises in recent weeks is funds and traders buying back short positions as the dollar retreated from historical highs against other major currencies.
A lower U.S. currency makes dollar-priced metals cheaper for holders of other currencies, which could boost demand.
China’s copper imports rose to 463,693 tonnes in July, up 9.3% from a year earlier as the sharp drop in prices triggered buying against a backdrop of falling domestic inventories.
Copper stocks in warehouses monitored by the Shanghai Futures Exchange
The lead price rose to a two-month high of $2,136.50 a tonne on worries availability on the LME market where stocks
This concern is also behind the premium for cash lead over the three-month contract
Aluminum was last up 1.2% at $2,446 a tonne, zinc was down 1.5% at $3,436, lead rose 4% to $2,154, tin slid 0.7% to $24,285 and nickel was down 2.7% at $21,625. (Reporting by Pratima Desai; Editing by David Goodman and David Evans)